Year end bonus payment delayed until 2023 - which tax year does it count for?

So I just found out my company screwed up my year-end bonus payment. It was supposed to be paid out in the last pay period of 2022 (Dec 16-31) but they somehow messed up and I didn't get it until the first paycheck of 2023 (Jan 1-6). When I asked payroll about it, they admitted it was their mistake and that the bonus should have been included in my final 2022 paycheck. Now I'm confused about how this affects my taxes. Does this bonus now count as 2023 income instead of 2022? My total compensation for 2022 was supposed to include this $8,500 bonus, but now it's showing up in my 2023 pay statements. I'm worried this is going to mess up my tax planning since I was counting on that bonus being part of my 2022 income. Can my employer fix this somehow or am I stuck with it counting as 2023 income now?

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18 comments

StormChaser

•8M

This is actually a straightforward issue in tax terms, though I understand why it's confusing! Income is generally taxable in the year you receive it, regardless of when it was earned or when it should have been paid to you. This is known as the "constructive receipt" rule. Since you physically received the bonus payment in January 2023, it will be counted as 2023 income for tax purposes, not 2022 income. Your employer will include this amount on your 2023 W-2, not your 2022 W-2. Unfortunately, your employer can't retroactively fix this for tax purposes. Even though it was their mistake, the IRS goes by when you actually had access to the money, not when you were supposed to have it. Your total taxable income for 2022 will be lower than anticipated, and your 2023 income will be higher by the bonus amount.

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StormChaser

•8M

Yes, the same principle applies to your situation as well. The income is taxable in the year you actually receive it. So if you received payment in December 2023, it counts as 2023 income for tax purposes, even if it was for work scheduled to be paid in 2024. The IRS follows what's called a "cash basis" method for individuals, meaning income is counted when you receive it, and expenses are counted when you pay them. This applies regardless of when the work was performed or when the payment was scheduled.

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Ava Williams

•8M

Had a similar issue last year and spent hours trying to figure it out! I ended up using https://taxr.ai to analyze my pay stubs and W-2s to make sure everything was reported correctly. It sorted through my documentation and confirmed exactly what the previous commenter said - bonuses count for the year you actually receive them, not when they were earned. The system was really helpful because it compared my final paystub totals with my W-2 and spotted a few other discrepancies that would have caused problems. Saved me from potentially getting flagged for audit since my numbers wouldn't have matched up with what the IRS received.

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Ava Williams

•8M

Yes, it absolutely works for independent contractors! It can process both W-2s and 1099s, and actually does a great job of comparing across multiple income sources to make sure everything aligns correctly. It even helped me identify some business expenses I was missing. The accuracy is what impressed me the most. My tax software (I use TurboTax) just accepts whatever numbers I input, but taxr.ai actually cross-references across documents. For example, it caught that my employer had incorrectly reported my health insurance premiums as taxable income when they should have been pre-tax. That alone saved me nearly $400 in taxes that my regular software would have missed.

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Zainab Ibrahim

•8M

Just wanted to follow up - I decided to try taxr.ai after my last post and I'm honestly surprised at how helpful it was. I uploaded my documents (had a similar bonus situation plus some stock sales) and it immediately flagged three reporting errors that would have cost me over $1,200 in overpaid taxes. What impressed me most was that it found a timing issue with some RSUs that vested right at year-end and explained exactly how they should be reported. I've been doing my own taxes for years and completely would have missed this. Definitely recommend for anyone with timing issues like the original post described.

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Connor O'Neill

•8M

If you need to talk to the IRS about this issue (or any tax issue really), I recommend using https://claimyr.com to get through to an agent quickly. I spent DAYS trying to get through the regular IRS phone line about a similar income reporting problem, just getting disconnected or told to call back later. With Claimyr, I got through to an actual IRS representative in about 20 minutes instead of spending hours redialing. There's a video showing how it works at https://youtu.be/_kiP6q8DX5c if you're curious. The IRS agent confirmed that income is counted in the year received, and they even noted in my file that my employer had made the payment timing error so there was documentation in case of questions later.

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Connor O'Neill

•8M

It's not hacking at all - it uses a completely legitimate method. The IRS phone system has certain times and entry patterns that are more likely to get through. Claimyr basically automates the process of calling repeatedly with the optimal timing and menu selections until it establishes a connection, then calls you when it gets through. It's the same as if you sat there hitting redial for hours, but it does the work for you. I was super skeptical too. My refund was delayed by months, and I couldn't get any information online. I figured I had nothing to lose by trying, and was shocked when I got the call back that they had an IRS agent on the line ready to talk to me. The agent answered all my questions and even expedited my refund once I explained the situation.

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Yara Khalil

•8M

I need to eat my words from my previous comment. After another week of failing to reach the IRS about my refund issue, I broke down and tried Claimyr yesterday. Got a call back in about 35 minutes with an actual IRS agent on the line. The agent was able to see that my refund was held up because of a mismatch between reported income on one of my 1099s and what the issuer reported to the IRS (similar to OP's timing issue but with contract work). Got it all sorted out in one call after months of frustration. Sometimes being wrong feels pretty good!

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Keisha Brown

•8M

One thing nobody's mentioned yet - this bonus delay might actually benefit you tax-wise depending on your income situation. If you were in a higher tax bracket in 2022 than you expect to be in 2023, you might actually pay LESS tax on that bonus now that it's pushed to 2023. My company did something similar (but deliberately) a few years back, and several of us actually came out ahead because of lower tax brackets the following year. Might be worth running the numbers both ways to see if you actually benefit from this mistake!

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Keisha Brown

•8M

Great question about the ripple effects. Yes, this can absolutely impact income-based programs. If you're on an income-based repayment plan for student loans, your payments are typically calculated based on your prior year's AGI (Adjusted Gross Income), so this could potentially lower your 2022 AGI and reduce your payments for 2023. For healthcare subsidies through the Marketplace, those are based on your estimated current year income. So if you're receiving subsidies, you might need to update your projected 2023 income to include this bonus, which could reduce your subsidy amount. It's always better to report changes proactively than to have to pay back subsidies at tax time.

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