Can I deduct labor expenses that was incurred in 2016, but paid in 2017 for my 2016 taxes?

I am self employed and I hired a subcontractor in 2016. All work was done in 2016 and the invoice was received in 2016. However, I was not able to send the payment until I received a w9 and payment info, which was January 2017. I really need to take the deduction for 2016 as the project was bigger than usual.

Answer

Per IRS, you can deduct the incurred expenses on your 2016 tax return ONLY IF you use accrued accounting method for your business.  

For more information, see How to claim business expenses

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TurboTaxLina , MST, EA
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