Back pay and taxes

Dachshund

My boss owes me a nice chunk of change from work in November that I won't be getting until early next year. We do consulting work and get payed on a net 45 day schedule, and the next payment isn't due in until January 5. We're running on empty right now, so I can't get paid until the company gets paid. In the past there was always a pool that we got paid from on a twice monthly schedule, but things are grim and the company is down to myself and my boss, the only 2 people who are still getting contracts.

My question is, how do I deal with this for tax purposes? I performed work in 2008 that I won't receive compensation for until early 2009. I'm due around $11,000. I live in CA.

Dunadan019

Dachshund wrote: »

My boss owes me a nice chunk of change from work in November that I won't be getting until early next year. We do consulting work and get payed on a net 45 day schedule, and the next payment isn't due in until January 5. We're running on empty right now, so I can't get paid until the company gets paid. In the past there was always a pool that we got paid from on a twice monthly schedule, but things are grim and the company is down to myself and my boss, the only 2 people who are still getting contracts.

My question is, how do I deal with this for tax purposes? I performed work in 2008 that I won't receive compensation for until early 2009. I'm due around $11,000. I live in CA.

you pay taxes based on when you get payed not when you did the work.

if you don't get the check until january it will go on next year's taxes not this year's.

scrivenerjones

Dunadan019 wrote: »

Dachshund wrote: »

My boss owes me a nice chunk of change from work in November that I won't be getting until early next year. We do consulting work and get payed on a net 45 day schedule, and the next payment isn't due in until January 5. We're running on empty right now, so I can't get paid until the company gets paid. In the past there was always a pool that we got paid from on a twice monthly schedule, but things are grim and the company is down to myself and my boss, the only 2 people who are still getting contracts.

My question is, how do I deal with this for tax purposes? I performed work in 2008 that I won't receive compensation for until early 2009. I'm due around $11,000. I live in CA.

you pay taxes based on when you get payed not when you did the work.

if you don't get the check until january it will go on next year's taxes not this year's.

almost right--if you are on the cash basis you pay taxes based on when you have "constructive receipt" of the income. this is why (for example) if you get paid on 12/31, you can't just wait until 1/1 to cash the check and not get taxed for that year.

OP: since you are (almost certainly) a cash basis taxpayer, you won't have to worry about it until the actual check gets cut, which won't be until next year. just make sure that when your boss does your W-2 or 1099 for 2009, he doesn't put any money on there that you havent actually been paid.

Dachshund

I used to be a non-exempt full time employee. No paperwork was done to change this, so I still am I suppose. I do have downtime between contracts nowadays, so do I need to change my status? We just ran out of cash in November and are awaiting payments.

scrivenerjones

Dachshund wrote: »

I used to be a non-exempt full time employee. No paperwork was done to change this, so I still am I suppose. I do have downtime between contracts nowadays, so do I need to change my status? We just ran out of cash in November and are awaiting payments.

:?: are you asking if you should be reclassified as an independent contractor? that's between you and your boss, so I have no idea. I doubt it though.