March 28, 2013

Housing Allowance Expenses: Cash or Accrual?

Question:

A minister was billed for his utilities the year after the expense was incurred. Should he deduct the expense in the year he incurred the expense or in the year he paid for the expense?

Answer:

By default, virtually all individual taxpayers are expected to report their income and deductions on a cash basis. This means that income received during the calendar year is taxable in that tax year. Also, expenses incurred are deductible in the year paid. This is also true of minister's housing expenses as illustrated in the above question.

No comments:

Post a Comment