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[[I received a bonus from my employer Dec 31, 1997 (it was in my account by 31 Dec, 1997 via
direct deposit) However it was not accounted for until my Jan paycheck. My employer is now
claiming it is 1998 income because it is on a Jan pay statement (with a date of completion of Dec
31). This will cost me hundreds of thousands of dollars in the long haul because it will put my
income over 100,000 for 1998, thus I will not be able to convert to Roth IRAs. Am I correct in
thinking, if I got paid the money in 1997, I should pay the tax on this upcoming tax form. (feels
kinda of wierd trying to move up paying taxes)]]

Sorry, but you are going to have to deal with your employer directly on this one. That, or get the services of a qualified tax/legal pro to review all of the information involved and provide you with an opinion.

It certainly makes no sense to me that the payroll was actually paid to you on 12-31-97, but the employer is trying to show the income as 1998. Generally, payroll is reported as received by the employee when received, not necessarily when earned. So while the employer may be on the accrual accounting system (reporting wage expense when earned, and not necessarily when paid), the employee is generally on the cash basis system and will report wages as income in the year paid.

How your employer can actually, physically pay wages in 1997, but attempt to report them as 1998 wages is beyond me. I've certainly never seen it before.

Wish I had some better news for you. Perhaps some other Fool could shed some light on this.

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