question for those who do their own taxes

[lonelyfarmgirl]

I record everything we spend on everything. It helps to determine where we need to cut back and how we can adjust for other things. My question is this. When you are getting into recording expenditures and money received at the end of the year, how do you record it?

For example, the credit card bill we receive to pay in January, with 2011 money, shows things that were charged in late november and up to mid december, 2010. So do you record the expenditures as 2010 (actual date), since that is when they were charged, or 2011, since that is when you are actually paying for them?

[wwubben]

The year you actually pay the bill or the date you receive payment is the year you figure that transaction in.You can prepay expenditures or take delayed payment to work with this for tax purposes.

[lhspirited]

On your tax return you will indicate if you are reporting on a cash or accrual basis. Cash means you report it in the year you pay it, accrual means you report it in the year you acquired it. I would look at the IRS instructions for the form you're filling out to see if you have a choice or if one or the other is required. I've always done our From F (farm tax return) cash basis, but I don't remember if it was my choice or it was required.

[lonelyfarmgirl]

my question isn't really directed towards how to do my taxes. sorry for the lack of clarity. that part I pretty much have down. I guess I am more interested to know how others here do it for their own personal record keeping.

[MO_cows]

IMO, accrual basis gets too complicated unless you are on Quickbooks or some bookkeeping software. We do cash basis, so the credit card bill you are describing would be a 2011 expense even though some of the purchases were in 2010.

[GoldenCityMuse]

Cash is easier, but I don't use the CC as anything but a temp account. I post all my purchases when they are made, no matter how they are paid ; cash check, MO or CC are all immediate.

[Macybaby]

never mind, I just read that you have the tax part figured out.

Personally - I do accrual basis - but I do accounting for a living, so it's no big deal for me to figure out.

I enter payment when I make the purchase, not when I get the CC bill, so I know what's out there that is going to show up later.

[SparkyMaine]

I record it when the money is spent or received. Treat it the same as a loan (they're both debts). If I buy a car with a loan for $8,000, I don't consider that an $8,000 expense when I buy the car. Instead, I consider the loan payment for each month as an expense for that month's budget.

[foxtrapper]

When I make the purchase, not when the credit card bill comes.