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Random Year End Tax Question

 
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Old 12-27-2017, 12:18 PM   #1
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Random Year End Tax Question


My acct comes Feb 1st. Every year I give him piles of numbers. Gross sales, expenses, outside labor, etc etc and he figures it all out and off we go. This is the first time in 20 years that I've ever been in the middle of a big job that won't be completed until the new year.

For arguments sake let's say I've collected 20K on what will be a 50K job and I have laid out about 12K so far. Do I report this as income and expenses this year or does everything carry over until next year when the job is complete? I guess I could just email my accountant but the internet knows all and there's a lot of experience on here.

I'm a small time guy with one or two big jobs a year then it's mostly kitchens and bathrooms and smaller gigs to fill in the gaps so it has literally never come up before.
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Old 12-27-2017, 12:25 PM   #2
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Re: Random Year End Tax Question


I don't know if the accountants have any fancy tricks, but I've always reported any income and expenses for the year in which they occurred. Irrelevant whether it's a completed project or an ongoing one.

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Old 12-27-2017, 12:52 PM   #3
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Re: Random Year End Tax Question


Quote:
Originally Posted by fred54 View Post
My acct comes Feb 1st. Every year I give him piles of numbers. Gross sales, expenses, outside labor, etc etc and he figures it all out and off we go. This is the first time in 20 years that I've ever been in the middle of a big job that won't be completed until the new year.

For arguments sake let's say I've collected 20K on what will be a 50K job and I have laid out about 12K so far. Do I report this as income and expenses this year or does everything carry over until next year when the job is complete? I guess I could just email my accountant but the internet knows all and there's a lot of experience on here.

I'm a small time guy with one or two big jobs a year then it's mostly kitchens and bathrooms and smaller gigs to fill in the gaps so it has literally never come up before.
Depends on cash or accrual basis of accounting.

Tom
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Old 12-27-2017, 02:23 PM   #4
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Re: Random Year End Tax Question


Depends on whether u r a cash or accrual tax payer. If you donít know, youíre probably a cash tax payer
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Old 12-27-2017, 02:55 PM   #5
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Re: Random Year End Tax Question


OK, sounds good. Let's assume then that I am a cash tax payer. What's my answer? And thanks for the responses.
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Old 12-27-2017, 03:01 PM   #6
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Re: Random Year End Tax Question


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OK, sounds good. Let's assume then that I am a cash tax payer. What's my answer? And thanks for the responses.
What tin said
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Old 12-27-2017, 03:11 PM   #7
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Re: Random Year End Tax Question


If you are 'cash' you report what you earned and what you expensed for the year end. If monies are owed/coming after the year end and not invoiced then those would be accounted for next year.
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Old 12-27-2017, 04:38 PM   #8
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Re: Random Year End Tax Question


When I was in this boat I would always stock up the job with materials at the end of the year, load up on new tools, prepay bills, anything to increase my spending and then wait until after the first to collect any payments due.

That way maximize expenses vs income.
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Old 12-27-2017, 04:57 PM   #9
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Re: Random Year End Tax Question


when you use Cash Basis accounting, it's actual cash received and paid during the year.

If you get a $5,000 check on 12/20/17 but don't deposit until 1/2/18 it is revenue for 2018.

A great thing to do for reporting is have your business accounts close at the end of the month. Just much cleaner at year and quarter end.
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Old 12-27-2017, 06:10 PM   #10
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Re: Random Year End Tax Question


I am wondering the same thing. For example we collected a deposit for $5,000 a few weeks ago and cashed it. But the job is delayed until next week and I haven't invoiced anything yet, can I claim all expenses for this year and all the income for the job in 2018 or do I have to leave the $5,000 behind in 2017?

This is our first year and haven't met an accountant yet, regrettably
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Old 12-27-2017, 07:08 PM   #11
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Re: Random Year End Tax Question


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Originally Posted by Jinglepot View Post
I am wondering the same thing. For example we collected a deposit for $5,000 a few weeks ago and cashed it. But the job is delayed until next week and I haven't invoiced anything yet, can I claim all expenses for this year and all the income for the job in 2018 or do I have to leave the $5,000 behind in 2017?

This is our first year and haven't met an accountant yet, regrettably
If you buy this year you take it this year. Purchase next year, they go on next years.

The payment goes on this years.

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Old 12-27-2017, 07:15 PM   #12
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Re: Random Year End Tax Question


There is a lot going on with that new tax bill. For many of us, this will be the last year we itemize on our personal taxes. Prepaying items like city/state tax, property tax, or even making charitable contributions, will be better now than in January.

I also just read up on the 20% deduction for small businesses. This will apply to many of us here, and will apply to pass through income, but not compensation. A lot to read up on and get prepared for.
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Old 12-27-2017, 09:18 PM   #13
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Re: Random Year End Tax Question


Run the # BOTH ways, spend the $ on materials for the project to delay the income till next year, if it makes a noticeable difference...

for a few bucks, why delay the income.

If you are near retirement age and plan on SSI as a significant fraction of your retirement schemes, you might be better off claiming it to pump your SSI monthly checks up......

You might want to "group" larger jobs in alternate years to max out SSI checks your last decade of work if you have some control when payments are actually deposited....

You need talk to your accountant now, so if there is some thing the new Tax Law allows you to reduce or delay your taxes, with something that MUST be done prior to New Year's day. $$$

Last edited by Fouthgeneration; 12-27-2017 at 09:21 PM.
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Old 12-27-2017, 09:53 PM   #14
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Re: Random Year End Tax Question


You are just telling the what came in and what went out.

The only thing you might mess with at all is when you send an invoice, deposit a check or pay for material.
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Old 12-27-2017, 10:11 PM   #15
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Re: Random Year End Tax Question


Not sure exactly how you are setup. We are accrual accounting and operate on contract complete. This means if we start a job in December but don't finish it until the following year it goes on next years books. Our accountant asks us for a list of jobs not completed by year end and then she will pull out the info for those jobs she needs to. This can be a huge help come tax time or screw you depending on timing and job size.

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Old 12-28-2017, 08:37 AM   #16
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Re: Random Year End Tax Question


Thanks all. It's not a big deal or a massive amount of money I just wanted some feedback and I appreciate it. I'm terrible and lazy at the money end of things but always make sure I am straight up with the government because I don't ever want any trouble.

Looks like in m y situation I put down the income and the expenses regardless of the job status.

Thanks again.

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