USA Business expense accounting when salary payment is delayed

[student1]

I need to pay a new hire salary for work done before December 31, 2015. But unexpected payroll processing delay means he will not receive salary payment for December 2015 until January 2016.


Questions:


1. For corporate income tax filing, can his salary expense (expected to be paid out in January 2016) still be accounted as part of the company's expense for 2015, even though payment occurs in 2016?


2. For the employee's personal income tax filing, should his salary (expected to be paid out in January 2016) be accounted as part of his personal income for 2015 or 2016?


Thanks!

 

[Bad Medicine]

Probably depends on the method you're both using to keep the books.

With accrual, you recognize revenue when you earn it, not when you receive it, and you recognize expenses when you incur them, not when you write a check for them. With cash its the opposite, you recognize income when you cash the check, and you incur expenses when you write the check.