Question

New business expenses

Forum|Forum|6 years ago
March 15, 2020
1 reply
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A friend of mine asked me a question that I didn't have a clear answer. He opened a Home care business last year. Some family members worked for him but didn't have enough cash to pay them because the business is not yet generating enough cash. How is he going to treat the unpaid expense when filling business taxes. Can he issues a 1099 misc in 2019 even though he didn't pay or it will be an expenses when actually paid. So the question is if he can report that unpaid expense on his business taxes in 2019.

Not A Product Question

D

DianeC958

No, he cannot report an expense that he has not paid. Once he pays the expense then he can take a deduction for it. If he pays the expense in 2020 then he can take a deduction in 2020.

He is a Cash Basis tax payer and only counts income when he receives it and expenses when they are paid.

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