jsmith9543[at]aol.com (JSmith9543) wrote:

- quote -

This doesn't make any sense. Simply because of the way the
calendar falls, if you are paid every two weeks, there will
be 27 pay periods in 2004. Count the weeks and you will see
that this works.

If the employer wanted to avoid this situation, it would pay
you twice a month. Then you would never have a 3-paycheck
month -- which you will have in 2004 in January, July, and
December. (When my late husband worked for the federal
government and was paid every 2 weeks, we just LOVED those
3-paycheck months! But usually you only get two in a year.)

So your employer will skip a pay period in December 2004??
I suppose they could date your Dec. 31, 2004 paycheck Jan.
1, 2005, but then you would end up with 27 pay periods in
2005. It has to catch up sometime <G> .

Katie in San Diego

The foregoing is intended for educational purposes only and
does not constitute legal or professional advice.

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jsmith9543[at]aol.com (JSmith9543) writes:

- quote -

If this relates to the bi-weekly pay period thread, you'll
have to decide if the screwing you're getting is worth the
screwing you're getting. Myself, I'd be looking to leave
Scrooge, Inc.'s employ.

Phil Marti
Topeka, KS

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I was told i'm paid an annual salary, therefore i will only
get paid for 26 pay periods in 2004. I will NOT get a 27th
check at end of year.

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jsmith9543[at]aol.com (JSmith9543) wrote:

- quote -

Usually the date of the paycheck is the year it is included
as income.

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JSmith9543 wrote:

- quote -

It's technically an issue of the method of accounting for
the taxpayer involved--but, presuming all employees are on
that cash basis of accounting, generally it has to be
included in the year the employee received it, either in
reality or constructively. Overly simplifying, constructive
receipt occurs when you have an unfettered right to demand
payment before the end of the year, but you do not do so
until after the year ends.

If they didn't actually write the checks until 2004, then
normally it would appear that you could not have had actual
or constructive receipt in 2004. Thus, this paycheck should
be included in your 2004 income.

On the off chance you have elected to use the accrual method
of accounting (highly unlikely, but still...), then it would
be included in 2003 since it appears it was earned there.

Which W2 will it appear in? Well, the employer might list
it on the 2003 W2. Note that this does *not* in reality
control when it is taxed to you, but it would mean you'd
need to explain the difference to the IRS.

However, assuming your employer is a calendar year accrual
basis taxpayer, they will report it on their tax return for
2003 because that's when, under their method of accounting,
the amount would be deductible (I'm presuming you don't own
more than 50% of the stock of the entity).

- quote -

That shouldn't have any impact unless you are truly paid an
*annual* salary and not an hourly rate--and even then, it's
not likely that any adjustment will be made. Rather, it's
simply a quirk of the calendar, your employer's election on
what period to pay over and your employer's date for cutting
checks. If you are paid hourly, you are simply paid for the
hours put in every two weeks.

Reality is there are not 26 x 14 days in any year (364
days)--there is always either one or two "extra" days in a
year, and that means eventually an "extra" payroll slips in.

--
Ed Zollars, CPA
Phoenix, Arizona

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jsmith9543[at]aol.com (JSmith9543) writes:

- quote -

Evidently you haven't been in the bi-weekly payroll world a
long time. This situation happens now and again (twice in
25 years in my case, IIRC). Your wages are taxable to you
when received, in this case, 2004. You will get 27
paychecks in 2004, unadjusted. Talk to your payroll people
about it. Hopefully there's someone there who's been through
this before.

Phil Marti
Topeka, KS

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jsmith9543[at]aol.com (JSmith9543) wrote:

- quote -

As a "cash basis" taxpayer (most of us are) your income is
determined by when you RECEIVE it, not by when you EARN it.
As long as you continue to receive a payCHECK every two
weeks it all works out, although it may make a minor change
in total income from one tax year to the next.

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JSmith9543 wrote:

- quote -

To answer the first part of your question, pay is included
in the W-2 for the year in which it is paid. Hence this
will go into 2004.

So you can see how it will affect your 7.5% medical
threshold.

From what you say, you are paid on a bi weekly basis, and
not on annual salary. Or are you? You didn't say.

Cheer$,
Harlan Lunsford, EA n LA

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- quote -

The one that said this is 2004 income. The other is off the
wall and just plain wrong.

Helen, EA in PA
Member of The Tax Gang
President, PA Society of Enrolled Agents
Campaigning for NAEA Board of Directors - Looking for YOUR vote

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"JSmith9543" <jsmith9543[at]aol.com> wrote

- quote -

Payroll is always based on the date the checks are made
available to the employees. This can be different than the
date on the check, or the date you actually receive it.

- quote -

I doubt they will not pay you a check. Aparently you are
being paid every-other-week. Generally there are 26 pay
periods under that method. This just happens to be one of
those cyclical things that come around every so often.

- quote -

I don't think you'll see any change in your check (short of
what normal adjustments get made).

--
Paul A. Thomas, CPA
taxman at negia.net

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I was just made aware the situation for 2004 regarding 27
pay periods. For 2003, my pay stub dated 12/19 was the 26th
pay period. Then the next cycle check was dated 1/2/04. We
now have conflicting info from our accountants. One is
saying we can include this overlap check for 2003, and other
one says NO it MUST count for 2004, since it was dated 2004?
Who is right? For me, this DRASTICALLY affects my deductions
- like meeting the 7.5% threshold for medical, like
qualifying for EIC. On the other hand, regarding the 27 pay
periods in 2004 - won't this also affect how much one is
paid? Will payroll departments simply not pay during the
27th pay period? or are most reducing the employees salary
so annual salary is then divided by 27 instead of 26? What
about things like Child Support - where it's based on a
percentage of your salary or where they won't take out more
the 50% - if salary goes down won't everyone's CS go down
too?

Please Help!

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