business income or not

Forum|Forum|3 years ago
January 26, 2023
1 reply
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I received advanced partial payment from a customer for a job yet to be done. Quick books pro does not show it as income for 2022. Only showing it as a credit owed to my customer. Do I claim it as income for tax year 2022 or not. Most of it will actually be spent on costs of parts to do the job for the customer.

TurboTax Home & Biz Windows

ThomasM125

Unless the advance is returnable to the customer, it is considered income so should be reported as such on your tax return. This assumes you report your income and expenses on the cash basis of accounting, which is typical for small businesses.

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Shirl4Author

Yes, it is a small business using the cash method of accounting. The amount "is" refundable to the customer if they decide not to do the job, but , has / was "not" refunded in 2022 or as of yet. Perhaps this is why Quick Books Pro does not show it as income . With that, should it be claimed as income for 2022 ?
Thank you in advance

SharonD007

Yes, since you are using the cash method of accounting, as ThomasM125 indicated, the income should be reported on your tax return in the year that you received it (2022).

Please review the TurboTax help article What is the cash method of accounting? for additional information.

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