I know it's barely January, but I got an early copy of Turbo Tax and have been noodling with my expected taxes. I need to wait for my W2 for my day job which is at least a few weeks out, but I've got some questions about the MS part of my return in the meantime.
Before I go any further: I know no one on here is a tax professional whose advice I am paying for. I know everyone's situation is different and that what works for you might not apply to me. I'm just asking for advice and experience. All decisions about how to file my taxes will be mine. If I feel like there's something I can't figure out myself, after listening to other shoppers' experience and being pointed to resources on irs.gov, I'll bite the bullet and hire someone to prepare them. But I think I can do it, and I actually kinda like doing my taxes (especially since I think I'm going to get a bit a refund this year). OK, disclaimers adequate? Then here goes:
I've read
Publication 334: Tax Guide for Small Business on irs.gov. I read the 2014 version and I understand there may be a revised one in the next couple of months, which I'll read. But in the meantime, I have a question about the Cash Method of accounting:
It seems pretty clear that you count income when you receive it. So, for the (hypothetical) shop I conducted on 12/15/15, I was paid by check that was issued to me on 1/10/16, I would count that income as 2016 income. What's less clear is whether I count any expenses incurred for that shop as 2015 expenses or as 2016 expenses. Do you guys count them based on when you performed them, or count the expenses as 2016 expenses? I would think you'd count them as 2015 expenses, but a couple of shops with high expenses that haven't been reimbursed yet could wipe out my (admittedly pretty small) profit for the year and inflate the next year's profits. It seems neater to keep the expenses and profits together, but I'm curious to hear what you do.
Thanks in advance everyone! I wasn't here on the board for last year's tax season, so I'll be interested to see the discussions that pop up. If they're as interesting as the non-tax discussions I've read and participated in, I'm looking forward to it. Also, I know I'm going to have more questions in the future (I could already have added at least 2 more, but I'll pace myself), so if anyone else wants to ask their own tax questions on this thread, feel free.
Shopper in California's Bay Area