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I have a question. I have a client that is always behind in payments, pleading poverty etc. I accept it and just deal with it but now it's tax season. She wants the total but has yet to pay me for the whole month of December. She says she will pay after the 1st when she gets a govt check but wants the total as if she paid in December so she can claim it on taxes and get it refunded. Being that technically I did not recieve those payments until after the new year do I still report it as being paid in December? Is it even legal to claim it as December?
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tom please correct me if I am wrong, but it is illegal to claim or not claim money you did or did not get. So your paper work will reflect what was actually paid in 2011.... -
I'm thinking you can claim it as a loss this year since you have not received it as per your contract terms. It will have to be claimed next year when/if you get paid after the first. I hope Tom can clarify better.
I am moving this tread to Daycare and Taxes category since that is where Tom looks.Comment
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parent owes money
Do not give a parent a receipt that indicates how much she paid you for 2011 unless the amount on the receipt represents what you received in 2011, not what you were owed. The parent can only claim her child care tax credit based on what she paid in 2011, not what she owed. So, don't cooperate with her on this point. Whatever amount you put on her receipt can be used against you - that is, the amount will be assumed to be collected by you in 2011 and you will owe taxes on it in 2011.
You report as income money you receive in the year you receive it, not the year it was earned or owed.Comment
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