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Posted by Paul Thomas, CPA on January 8, 2007, 10:18 pm
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> I just received my last paycheck of 2006 in 2007. My
> company has reset all of my totals and started taking out my
> 401K contributions again (already at maximum contribution
> for 2006). I thought that taxes were paid on wages earned
> in a year not paid in a year. Is this the correct way to
> report my income?
Payroll is a taxable event in the year in which it's first
made available to you. So if you were able to pick up your
check in December, but you were out on vacation till
January, it's December income. And, if they don't cut
checks every two weeks, and they delay payment for a week,
all two weeks worked fall in December, but the actual pay
date falls in January, it's January income.
--
Paul Thomas, CPA
paulthomascpapc@bellsouth.net
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<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
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<< to this newsgroup as well as our anti-spamming policy >>
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Posted by ebetts3 on January 8, 2007, 10:18 pm
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Steve wrote:
> I just received my last paycheck of 2006 in 2007. My
> company has reset all of my totals and started taking out my
> 401K contributions again (already at maximum contribution
> for 2006). I thought that taxes were paid on wages earned
> in a year not paid in a year. Is this the correct way to
> report my income?
When paid, the date of the check.
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by pjhartman@gmail.com on January 8, 2007, 10:18 pm
Please log in for more thread options Steve wrote:
> I just received my last paycheck of 2006 in 2007. My
> company has reset all of my totals and started taking out my
> 401K contributions again (already at maximum contribution
> for 2006). I thought that taxes were paid on wages earned
> in a year not paid in a year. Is this the correct way to
> report my income?
In my experience, I've always had the tax year "reset" after
the last pay date of a particular year. In other words, the
first paycheck of 2007 may be fully or partially paid due to
work in 2006, but counts as 2007 income, because it's paid
in 2007.
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by Katie on January 8, 2007, 10:18 pm
Please log in for more thread options Steve wrote:
> I just received my last paycheck of 2006 in 2007. My
> company has reset all of my totals and started taking out my
> 401K contributions again (already at maximum contribution
> for 2006). I thought that taxes were paid on wages earned
> in a year not paid in a year. Is this the correct way to
> report my income?
Individuals, with extremely rare exceptions, are cash method
taxpayers. You pay tax on the wages you receive, not what
you earn.
The employer probably accounts for its expense on an accrual
basis, for its own tax and book purposes. But it properly
files its payroll reports, including W-2's, on a cash basis.
Your W-2 should agree with the pay stub you received with
the last paycheck you got in 2006.
Katie in San Diego
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by Phil Marti on January 10, 2007, 10:16 pm
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> Individuals, with extremely rare exceptions, are cash method
> taxpayers. You pay tax on the wages you receive, not what
> you earn.
>
> The employer probably accounts for its expense on an accrual
> basis, for its own tax and book purposes. But it properly
> files its payroll reports, including W-2's, on a cash basis.
It doesn't hurt to note that even if the employee is an
accrual-basis (or non-December fiscal year) taxpayer, the
employer reports the same way. The employee does all the
adjusting for accrual basis. (FICA/Medicare are based
solely on date paid.) The withholding credit is not
allocated but all goes on the return for the employee's tax
year beginning in the withholding year.
--
Phil Marti
Clarksburg, MD
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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