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Old 06-23-2017, 03:23 PM
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Splitting income over multiple tax years?

Good day!

I'm currently employed full time but that will end in a month when I move to a new state and prepare to start graduate school. However, I am working on arrangement with my employer to become a contractor for the next couple of years and provide back up, advisory, etc. services. If I get paid for that period all up front, is there any allowance to split that income into multiple tax years? For example, half in 2016 or half in 2017? Or would I have to claim it all in 2016 (or in whatever year I actually receive the payment)?

Thanks!



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Old 07-15-2017, 04:23 AM
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Join Date: Jul 2017
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Hi,
For an independent contractor, you basically are self-employed. As a self-employed person you file a Schedule C and you have the option of choosing accrual based or cash based accounting, most people just stick to cash based. For cash based, you will file when you receive payments. If you receive it all in 2017, then yes, you have to file it all in that year unfortunately. Keep in mind, that you get to deduct a lot more expenses so keep a log of all business related expenses as well as personal expenses that can be deducted (example % use of personal cell phone for business use). Hope this helps!



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