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BK-CPA
BK-CPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 933
Experience:  Owner of a CPA firm
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WE ARE A S CORP AND WE HAVE BEEN INCOROPORATED SINCE MAY 2003.

Customer Question

WE ARE A S CORP AND WE HAVE BEEN INCOROPORATED SINCE MAY 2003. WE WERE SWITCHED TO PAYROLL IN 2009 INSTEAD OF 1099'S. IN 2009 WE PAID OUR 941 QUARTERlies by mail UNTIL THE LAST QUARTER . WE THEN HAD OUR 941 PAYMENTS WITHDRAWN OUT OF OUR BUSINESSCHECKING MONTHLY. THE PAYMENT THAT DRAFTS IN JAN 2010 FOR DEC 2009 DOES IT FILE WITH THE 2009 TAXES EVEN THOUGH IT WAS PAID IN JAN 2010. WHICH IS WHEN ITS DUE
Submitted: 5 years ago.
Category: Tax
Expert:  BK-CPA replied 5 years ago.

Hello and thank you for your question.

 

See Rev. Ruling 80-164 for a cash basis taxpayer. The employees' share of payroll taxes is deductible in the year the wages are paid. The employer's share of taxes is deductible in the year paid. Employers pay FICA, FUTA, and SUTA. Employees pay FICA, fed w/h, state w/h, etc.

 

If you are an accrual basis taxpayer, then you should probably be accruing the full amount...

 

Either way, this should clear it up. I'm not attuned to your method of accounting for tax purposes (right or wrong it should generally be consistent), so I can't give you a definite answer, but you've got what you need now when it comes to applying the information to your specifics.

 

For a much more thorough discussion between tax pros (some confused), see here:

 

http://www.taxalmanac.org/index.php/Discussion:Cash_basis_adjustments

 

Thank you again for your question!

 

 

....

Ref-

 

http://www.legalbitstream.com/default.asp

 

Rev. Rul. 80-164

 

"HOLDING

 

An employer who reports income on the cash receipts and disbursements method of accounting should deduct under the provisions of section 162 of the Code the withheld federal taxes (imposed on the employee and with­held from the employee's wages) as wages for the taxable year in which such taxes are withheld. However, the FICA and Federal Unemployment Tax Act taxes (section 3301) imposed upon the employer with respect to wages paid employees are deductible when paid to the United States."