Cash Basis

June --

I am an RN case manager.

In 2008, I received one check that went on a 1099, however, I became an employee of the same company on Jan 1.

Am I right in assuming that I can't deduct any expenses for that check since it was earned in Dec, 2007?

Mary
Knoxville, TN


Dear Mary,

I think I understand your question but am not sure so I'll just give you some info that may help you out.

You are a cash basis taxpayer. That means that you deduct the expense in the year incurred. You claim the income in the year received. If you had self-employed expenses in 2007, that's when you should have deducted them. If you were paid in 2008, that's when you claim the income.

There are ways to change your accounting method from cash basis to accrual. In your situation it doesn't seem worth it.

-- June