Late wire transfer not in my account yet - should I count this on last year's taxes or 2025?
Title: Late wire transfer not in my account yet - should I count this on last year's taxes or 2025? 1 I'm in a bit of a panic right now. One of my biggest clients sent me a substantial payment via wire transfer last Thursday, but it's still not showing up in my bank account as of today. This payment was definitely meant to be counted as 2024 income, but now I'm worried that since it's likely going to hit my account in 2025, I'll have to report it as 2025 income for tax purposes. This would seriously mess up my tax situation if that's the case. I was counting on this payment to be part of my 2024 earnings, and my quarterly estimated payments were calculated with this in mind. If it gets pushed to 2025 income, I'm worried I might end up with underpayment penalties for 2024 and a much higher tax bill for 2025. The client will be issuing my 1099 this month, and I'm pretty sure they'll include this payment on my 2024 1099. Will that be enough to justify counting it as 2024 income even if it didn't actually reach my bank account until 2025? Any advice would be greatly appreciated - I'm seriously stressing about this! 😫
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Oliver Schmidt
15 For most taxpayers, this is actually something you don't need to worry too much about. The IRS follows what's called "constructive receipt" doctrine. If the funds were made available to you in 2024 (meaning the client initiated the transfer in 2024), but you just didn't physically receive them until 2025 due to banking processing times, you can typically count it as 2024 income. The key question is: Did the client actually send the wire in 2024? If yes, and the delay is just normal banking processing time (especially with year-end transfers which can take longer), then this would generally be considered 2024 income. If they just promised to pay you but didn't actually initiate the transfer until 2025, then it would be 2025 income. Since you mentioned the client will be including this on your 2024 1099, that's a good indication they consider it a 2024 payment. You'll want to make sure your reporting matches what appears on your 1099 to avoid triggering any automatic mismatch flags in the IRS system.
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Oliver Schmidt
•7 This is so helpful, thank you! But what kind of documentation should I keep just in case the IRS questions this? Would an email from my client confirming they sent it in 2024 be enough? And what if my bank statement only shows the deposit in January 2025?
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Oliver Schmidt
•15 Documentation is always good to have. An email confirmation or receipt showing the client initiated the wire in 2024 would be helpful. The bank statement showing the January 2025 deposit is actually expected in this case - it's normal for there to be a delay between when funds are sent and received. What's most important is that your reporting matches the 1099 your client issues. If they include it on your 2024 1099-NEC or 1099-MISC, then report it as 2024 income. The 1099 itself serves as documentation that the client considered this a 2024 payment.
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Oliver Schmidt
12 After dealing with a similar situation last year, I found an amazing tool that helped me sort through all my income documentation. I used https://taxr.ai to analyze my bank statements, client payments, and 1099 forms to make sure everything matched up correctly. It saved me hours of stress trying to figure out which tax year certain payments belonged to. In my case, I had several payments that crossed over the new year, and taxr.ai helped identify exactly which ones qualified as prior year income based on when they were sent versus received. The tool can analyze your payment documentation and help determine the correct tax year based on IRS rules about constructive receipt.
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Oliver Schmidt
•9 How exactly does taxr.ai handle these year-end transfer situations? I've got a couple of payments that were initiated in late December but didn't clear until January. Does it automatically know which tax year to assign them to?
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Oliver Schmidt
•18 I'm curious about this too. Does it actually look at the wire transfer details or just the bank deposits? Because my client says they sent it but I have no way to verify exactly when except their word and eventually the 1099.
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Oliver Schmidt
•12 The tool analyzes the documentation you upload, including payment confirmations, wire transfer receipts, and bank statements. It looks for the initiation date of the payment which is what matters for tax purposes, not just the deposit date. For situations where you only have the client's word, taxr.ai helps you organize this information alongside the 1099 they provide. It flags potential discrepancies between what you report and what shows up on official tax documents, which is crucial for avoiding IRS issues. The system actually walks you through what documentation you need for different types of payment situations.
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Oliver Schmidt
18 Just wanted to update after trying taxr.ai that was mentioned earlier. It was actually super helpful for my situation! I uploaded my client's payment confirmation email (which showed they initiated the wire on December 29th) along with my January bank statement and the 1099 they sent me. The system confirmed that based on the "constructive receipt" principle, this should indeed be counted as 2024 income since the client made the payment available in 2024, even though it didn't hit my account until 2025. It also gave me a nice summary document explaining the reasoning that I can keep with my tax records. Definitely worth checking out if you're dealing with these kinds of timing issues!
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Oliver Schmidt
5 If you're still stressing about this and need more confirmation, I'd recommend contacting the IRS directly. I know calling them seems impossible (I tried for WEEKS last year about a similar issue), but I used https://claimyr.com and was able to speak with an actual IRS agent in under an hour. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c My situation was with a big client payment that crossed tax years and I wasn't sure how to handle it. The IRS agent confirmed exactly what others are saying here - it's about when the client made the payment available, not when it hit your account. Having that official confirmation directly from the IRS gave me peace of mind when filing.
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Oliver Schmidt
•14 Wait, this service actually gets someone from the IRS on the phone? How is that even possible? I thought it was literally impossible to reach them these days. What's the catch?
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Oliver Schmidt
•2 Sounds like a scam to me. Nobody can get through to the IRS, especially during tax season. I've tried for days at a time and just got disconnected. How would some random service be able to do what everyone else can't?
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Oliver Schmidt
•5 It's definitely not getting someone from the IRS on the phone for you - you still talk to the IRS yourself. What Claimyr does is navigate the IRS phone tree and wait on hold for you, then calls you when an actual IRS agent picks up. There's no magic access - they're just using technology to handle the brutal wait times so you don't have to sit there listening to hold music for hours. I was skeptical too, but it worked exactly as advertised. I got a call back when an agent was on the line, and I was able to ask my questions directly to the IRS.
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Oliver Schmidt
2 I need to eat my words. After seeing the responses here, I decided to try that Claimyr service even though I was convinced it wouldn't work. I was shocked when I got a call about 40 minutes later with an actual IRS agent on the line. I explained my situation with payments crossing tax years, and they confirmed it's the date the payment was initiated that matters, not when it hit my account. The agent even gave me specific advice about keeping documentation showing when the client sent the payment. They said as long as my reporting matches what's on the 1099, and I have some evidence the payment was made available in 2024, I should be fine. Definitely worth the peace of mind to hear it directly from the IRS!
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Oliver Schmidt
11 Just a heads up, I've been self-employed for over a decade and this happens ALL the time with year-end payments. The key is consistency between what you report and what your client reports on your 1099. In my experience, if both sides treat it as 2024 income, you're golden. The IRS cares more about matching reports than the exact day a payment hits your bank.
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Oliver Schmidt
•3 What about the opposite situation? I have clients who paid me in December 2024 but want to count it as 2025 expenses for their business. Can they do that or does it have to match the year they actually sent the payment?
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Oliver Schmidt
•11 That's a different situation and generally wouldn't work. Businesses must report expenses in the year they were actually incurred/paid. If they paid you in December 2024, that's a 2024 expense for them, not a 2025 one. The IRS is pretty strict about matching the payment year with the expense year for businesses. They can't just choose to push an expense to the next year if they already paid it. This is different from the original question which was about when a payment is considered "received" by the recipient.
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Oliver Schmidt
22 Has anyone here had the IRS actually question this kind of thing before? I'm curious how much they really care about a payment that's off by a few days across tax years. Seems like they'd have bigger fish to fry?
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Oliver Schmidt
•16 They typically don't care about a few days IF your reporting matches what's on your tax forms. The issues come when you report income in 2025 but your client reports paying you in 2024 on your 1099. That mismatch will trigger automatic flags in their system.
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