Effective Date of Withholding taxes

[blueman]

What is the name of your state? MN

Hi,
I have a question about the timing of withholding tax payments:

My business has a payroll on 12/31/07 so that my books show withholding tax payments on 12/31;

But: the withholding tax payments are not actually deposited to IRS and state until some time between January 1 and January 15

Then: I assume that (for the purposes of our business tax return) these payments would show on my books in Financial year 2007.

Is that correct??

Thanks .... Blueman.

 

[las365]

You may do better by posting your question in the Tax section of the forum. I think your question is one for an accountant.

 

[TinkerBelleLuvr]

The answer depends on whether you are an accrual or cash based business.

 

[blueman]

We are a cash based business

 

[LdiJ]

We are a cash based business

Then they would count as expenses for 2008. If you want them to be expenses for 2007, then you have to make the payments on 12/31/2007.

 

[blueman]

Thanks a Bunch