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Prepaid Income and Assignment of Income

Items such as income for future services are generally included in income in the year the taxpayer receives the income unless the taxpayer uses the accrual method (Accounting method that reports income when earned [not necessarily received] and expenses when incurred (not necessarily paid), as opposed to the cash method. of accounting).  If the accrual method is used, the income should be reported as the services are performed. 

 

Income paid to a third party on the taxpayer’s behalf is income to the taxpayer and must be reported on his tax return in the year the third party received the income.

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Cathy Fisher

Common Cents Bookkeeping and Tax Preparation

Serving Henderson, NC, Buncombe County, Polk County, Transylvania County

E: cathy@commoncentsqbo.com

P: 828-595-2835

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