Dumb tax question

[rubytue]

Snow day taxes - woohoo!!!

H gets paid weekly. No bonuses. He had no additional withholdings besides taxes and FICA (I carry everything and he has no retirement plan through work). Also, no direct deposit option. Asking me why won't affect anything. Not an option.

His company was closed Dec 25/26 and Jan 1/2. Therefore, he was given his 12/26 check on 12/24. Also, his check dated Jan 2 was handed to him on 12/31.

My thinking is his W2 should match his pay stub dated 12/26 because the next paycheck was dated 1/2/15, which makes it 2015 income, even though it was handed to him on 12/31/14.

His W2 shows exactly one week (40 hours) more income than the 12/26 paystub. For context, last year it took 4 W2s to get it right, so my instinct is its wrong again. (last year was a SS withholding issue, which shows up again if I use the 12/26 numbers but not the 1/2/15/W2 numbers. Ugh!)

[rubytue]

Anyone?

Yeah, I know. In my head the check is dated 1/2/15 so of course it's 2015 income, but it's the only way the W2 we have makes sense. And I just need reaffirmation that I'm not going crazy.

Maybe I should add a tl;dr version:

Could handing a postdated paycheck to someone on 12/31/14 cause that to be 2014 income?

[illgetthere]

I read your post yesterday, but I honestly have no clue. I know income is counted the year you receive it, but you don't have proper proof of when it was received since it is post dated. Sorry...I know you already know everything I just said

[rubytue]

Mar 6, 2015 11:34:07 GMT -5 illgetthere said:

I read your post yesterday, but I honestly have no clue. I know income is counted the year you receive it, but you don't have proper proof of when it was received since it is post dated. Sorry...I know you already know everything I just said

Can I just say even that helps? Because now I know I'm not as crazy as I think. It seems so basic, but then why is the W2 wrong? And sadly, we don't have the paystubs from Jan to try to sort it out. I only saved the last one of 14 due to last year's debacle.

[Deleted]

To me, and you don't have access to this I am sure with how shady your H's employer is, it would depend on when the journal entries are made and to what date they're attributed.
For instance, let's say they use Pay.chex or A.DP for their payroll, or even if they did this in house. If they use a company, they submitted payroll on Monday, Tuesday at the absolute latest, for the paycheck dated Friday 1/2. However, the payroll and payroll taxes were most likely debited from the company's account on 12/31 making it 2014 income.

[Deleted]

Also, is he paid in arrears? If so, the 1/2 paycheck was for work done 12/22-12/26 which is DEFINITELY 2014 income.

[cajunmom]

I always thought it was counted as income for the days you earned it? Not when it was paid. Like, if he was supposed to be paid Jan. 2 that pay would have been for the week before, the dates of Dec.21st-27th. Ergo, 2014 income.

[crashgizmo]

Mar 6, 2015 11:53:56 GMT -5 @mrsspunky said:

Also, is he paid in arrears? If so, the 1/2 paycheck was for work done 12/22-12/26 which is DEFINITELY 2014 income.

Thats what I was wondering too. I am paid on the 7th for the pay period of the 15th-30th. 

[Deleted]

Mar 6, 2015 11:55:46 GMT -5 cajunmom said:

I always thought it was counted as income for the days you earned it? Not when it was paid. Like, if he was supposed to be paid Jan. 2 that pay would have been for the week before, the dates of Dec.21st-27th. Ergo, 2014 income.

Exactly.
I am salaried, so I got paid today (for instance) for working today and the past 2 weeks. However, if I were hourly or if my company operated differently (basically I started in the middle of a pay period so I got paid for 1 week the pay period I started vs. 3 the following), I would be paid next Friday for working today and the past 2 weeks.

[rubytue]

@mrsspunky - that makes sense! Maybe it is right after all. I just don't trust them lol

He is trying to get reprints of his paystubs for 1/2 and 1/9. If I can confirm that YTD starts over on 1/9 I'll relax about it. I'm just kinda nervous next year will start from the wrong date. Actually, it just occurred to me we haven't checked the "to be shredded" pile. They might still be here!

[Deleted]

I think it's right even though it seems wrong. And I don't blame you for questioning it. See: history of Mr. Ruby's dealings with shady company.

[rubytue]

Well, the to-be-shredded pile is my savior. Still missing 1/2 and 1/9 paystubs, but did find 1/16 and a bunch more after (and before, but those are irrelevant).

Based on the deposits we made, those two weeks were 32 hour weeks. And the 1/16 paystub YTD is consistent with working 72 hours YTD. So BAM! Proved the 1/2/15 check is included in the 2015 YTD.

So now to backtrack and find out what is wrong with W2 vs 12/26. *sigh*

Eta - and bc I know the early jan deposits were ATM rather than mobile, I'm checking cars for missing paystubs.

[kadams767]

Mar 6, 2015 11:59:27 GMT -5 @mrsspunky said:

Mar 6, 2015 11:55:46 GMT -5 cajunmom said:

I always thought it was counted as income for the days you earned it? Not when it was paid. Like, if he was supposed to be paid Jan. 2 that pay would have been for the week before, the dates of Dec.21st-27th. Ergo, 2014 income.

Exactly.
I am salaried, so I got paid today (for instance) for working today and the past 2 weeks. However, if I were hourly or if my company operated differently (basically I started in the middle of a pay period so I got paid for 1 week the pay period I started vs. 3 the following), I would be paid next Friday for working today and the past 2 weeks.

I don't think this is right. You are a cash basis taxpayer and income is based on when it is received, isn't it?

[Deleted]

(ETA to the OP) I don't see it that way, so long as he is paid in arrears. If he is paid in arrears, the 1/16 pay stub would be for work done 1/5-1/9 and the 1/9 pay stub was from work done 12/29-1/2.

He isn't getting paid on 1/16 for work done on 1/16, because let's say he's an hourly worker with no PTO and doesn't show up for work that day. No work = no pay. If he was paid that way, and worked all 5 days that week, he would then, to make it up, be paid 4 days instead of 5 and that's not how this works.

[mrsfarmer]

Mar 6, 2015 11:59:15 GMT -5 crashgizmo said:

Mar 6, 2015 11:53:56 GMT -5 @mrsspunky said:

Also, is he paid in arrears? If so, the 1/2 paycheck was for work done 12/22-12/26 which is DEFINITELY 2014 income.

Thats what I was wondering too. I am paid on the 7th for the pay period of the 15th-30th. 

NO.  Taxpayers are always cash basis earners.  It will accrue on 2014 business books, but it is 2015 cash income to the taxpayer.

[kadams767]

Mar 6, 2015 12:39:10 GMT -5 @mrsspunky said:

(ETA to the OP) I don't see it that way, so long as he is paid in arrears. If he is paid in arrears, the 1/16 pay stub would be for work done 1/5-1/9 and the 1/9 pay stub was from work done 12/29-1/2.

He isn't getting paid on 1/16 for work done on 1/16, because let's say he's an hourly worker with no PTO and doesn't show up for work that day. No work = no pay. If he was paid that way, and worked all 5 days that week, he would then, to make it up, be paid 4 days instead of 5 and that's not how this works.

Right, but if a check is to be paid on 1/2 for work done prior to that, it doesn't matter. The income is 2015 income, not 2014 income. The confusion here is only because they handed out a live post-dated check on 12/31, which they shouldn't do. Think about it this way - if he had direct deposit, it would have been deposited 1/2, and no question, that is 2015 income. I think his W-2 is just wrong because the employer is disorganized and possibly not with it when it comes to payroll.

[Deleted]

I think the employer is disorganized and whomever the bookkeeper is, or the payroll company, whichever, is generating the W-2 based upon the journal entry or bank statement which had the funds debited from the company account on/before the 31st.

[rubytue]

Mar 6, 2015 12:43:08 GMT -5 kadams767 said:

. I think his W-2 is just wrong because the employer is disorganized and possibly not with it when it comes to payroll.

DING DING DING!!!

On the plus note, I can prove it now. Before, I was assuming I was right, now I know I am.

Thing is, I'm 100% sure it's wrong for all 25 employees. Many of which have already filed. And now that I see that YTD for 2015 is accurate, it means we will go through this again next year and likely everyone else is screwed.

[rubytue]

Mar 6, 2015 11:53:56 GMT -5 @mrsspunky said:

Also, is he paid in arrears? If so, the 1/2 paycheck was for work done 12/22-12/26 which is DEFINITELY 2014 income.

oh, I missed this while I was typing. I know for certain this is wrong. I'm paid 2 week in arrears, and my first jan paycheck was definitely for Dec work but is 2015 income. I work for the gov and I know they do things right. They may be effed in many other ways, but payroll follows IRS rules 100%.

[rubytue]

One last twist - I now have a copy of the 1/2/15 pay stub. It *does* start YTD fresh (YAY!). The twist, the W2 numbers are *not* 12/26 pay stub + 1/2 pay stub. Best I can tell, the W2 numbers are all pulled from thin air. The gross is 40 hours more, but H didn't have a 40 hour paycheck until 1/16. But since it was 40 hours, I assumed they added on the next paycheck. Now that I see he didn't work 40 hours, hell with that! We are scanning everything and sending it to their bookkeeper on Monday with a note to fix or explain.

Man I wish he didn't like where he was so much, because the accounting issues drive me BATTY. I have accepted I can't make him find a new job, so expect bitching to continue until the company goes under.

[rubytue]

Just to update, and bc I'm pissed to hell.

We got a spreadsheet of H's paystubs for the year. The totals match the W2. There is no explanation for why the paystubs aren't correct. The difference is $1000 (higher on W2).

Just "finished" the taxes. Our AGI is $829 over the cut off that determines your state exemptions. $830 less and we'd have double the state exemptions. And that $829 is costing us $500 in taxes. Bitch the fuck ass!!!

I'm now double checking the spreadsheet and pouring over all our landlord expenses with a fine tooth comb. I might find another $200 in travel expenses, but not $830

And yes, I've been through both turbo tax and tax act. They are $12 apart.

[LoveTrains]

Ugh so annoying. And yes all taxpayers are done in cash so you pay on what you received in 2014.