I’ve worked many jobs before and never heard anything like this. My boss claims she has to pay us within the year we work. So every December, she requires our work is done by 26th so payroll can be run early and we get paid on the 30th/31st. Essentially this means we don’t have to work the 27th-31st, unless a problem comes up, but it’s just so weird to me.
This is a W2 job, paid monthly based on monthly assignments given. Not sure if any of that factors in, but even when I was hourly and salaried, I never heard this.
Boss says she has to pay us for 2025 in 2025? True?
byu/mischeviouswoman intax
Posted by mischeviouswoman
10 Comments
If that’s how she wants to do her taxes or keep things orderly on her side, sure. Income is taxed in the year it’s paid.
Nothing says she can’t pay you next year for work done this year. I don’t know where she got this idea from.
But, if I were you, I wouldn’t complain too hard and just enjoy the week off.
She doesn’t have to in like, legal terms. It’s a her thing and since you work there, that’s how it is.
It’s not a requirement, it is a tax planning measure. Cash basis taxpayers have an incentive to pay all liabilities at year-end including accrued wages.
I realize this is a tax sub, but are you sure the reason is tax-related? I could imagine a contractual arrangement with another company you are a supplier to might have this sort of requirement.
Based on what I know about financial accounting, that is not actually required but does make the math easier. Otherwise, you have to account for “pending payroll” on the end of the year balance sheet.
I’m not inclined to complain about being paid sooner than later. Some employees may not want it changed so that—after a year with 11 months of pay to effect a change (presumably last December had two months’ pay for November and December, and there was no pay received last January—there’s an ongoing one-month deferral in future years. Perhaps at one point there was a failure around awareness or misunderstanding of application of the short-term-deferral tax-law provision for accrual-basis taxpayers. While the employer could still deduct wages paid in January for December-rendered services while making a change to its routine, the employees would incur a one-month cash-receipt deferral, and a tax year with ~11/12ths of typical annual income. Hopefully earlier receipt of cash flow in the holidays’ month doesn’t translate into coming up short to pay normal bills in a month! Otherwise, enjoy a bit more interest income on the accelerated wage receipt!
We did that at a previous employer but it was at the fiscal year break at the end of June. We ran two short payrolls, one up to June 30, and one for what was left of the period going into July. It was a non-profit, so not for tax issues but for reporting issues on grants.
I’ve worked at a few companies that have done this in the last. Typically we would get paid in full for the last week buut the company would typically send people home early .
Sounds like she’s trying to mediate her cash flow for YE Financials