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Brad, Retired IRS Agent
Category: Tax
Satisfied Customers: 177
Experience:  Retired; 32 years service and expertise in Individual, Partnership, Trust, Corporate Tax Law;Mensa
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I retired in Dec so my retiement check would be on ...

Resolved Question:

I retired in Dec so my retiement check would be on 2008, not 2007, but they sent it dec 27, valid 1/01/08. Do i need to file with this years income?
Submitted: 9 years ago.
Category: Tax
Expert:  Brad replied 9 years ago.

Good Day,Customer

U.S. Taxpayers are cash basis taxpayers; this means that we report our income for tax purposes in the year received. If you receive a valid check in 2007 without cashing it, it is still considered to be constructively received taxable income.

In your case, you received a check that is not valid until 2008; therefore, it is NOT taxable income until 2008

You received a retirement check on Dec 27, 2007. This check cannot be legally cashed until January 1, 2008.

If you somehow managed to cash this check or deposit it in your bank account where you had access to it in 2007, then it is taxable income in 2007.

Otherwise, this retirement check is taxable income in 2008 when you could validly cash it..

The key here is that the check could not be cashed by you during 2007; therefore, there is no way that you could have benefited from such taxable income in 2007.

The caveat is that if you managed to gain access to the money in 2007, then you created a situation where it is taxable income in 2007.

You can read all about taxable income in the following IRS publication:


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