Cash Basis Taxpayer

DEFINITION of 'Cash Basis Taxpayer'

A taxpayer who reports income and deductions in the year that they are actually paid or received. Cash basis taxpayers cannot report receivables as income, nor deduct promissory notes as payments.

BREAKING DOWN 'Cash Basis Taxpayer'

The rules for cash basis taxpayers are essentially the same as for cash basis businesses. Cash basis accounting is the alternative to accrual basis accounting.

RELATED TERMS
  1. Standard Deduction

    A base amount of income that is not subject to tax and that can ...
  2. Schedule A

    Schedule A is a U.S. income tax form that is used by taxpayers ...
  3. Charitable Contributions Deduction

    One of the itemized deductions available for taxpayers who donate ...
  4. Blind Taxpayer

    A taxpayer who qualifies for the additional standard deduction ...
  5. Registered Retirement Savings Plan ...

    The amount that a Canadian taxpayer contributes to his or her ...
  6. Office Audit

    An examination of a taxpayer's records by the Internal Revenue ...
Related Articles
  1. Financial Advisor

    Increase Your Tax Refund With Above-The-Line Deductions

    Find out about these deductions and how you can use them to lower your tax bill.
  2. Personal Finance

    7 Expenses You Won't Believe Are Deductible

    Many taxpayers would be surprised to discover some of the things that qualify as legitimate deductions.
  3. Personal Finance

    Start Over With The IRS

    If you're struggling to pay back taxes, try a fresh start with the IRS. They really can help.
  4. Personal Finance

    Calculating the Mortgage Interest Tax Deduction

    The amount of money you save by paying your mortgage off quickly will far exceed any benefit from the mortgage interest tax deduction.
  5. Investing

    Personal Income Tax Guide: Avoiding Nasty Surprises

    By Ken ClarkThe last thing any taxpayer wants to find in their mailbox is a letter from the IRS, unless of course it holds their refund check. That's why, for many taxpayers, filing their return ...
  6. Personal Finance

    11 Tax Deductions You Can't Actually Write Off

    These are some of the most common tax write-offs that you can't really claim.
  7. Personal Finance

    What's IRS Form 1040 For?

    Most U.S. taxpayers will be familiar with the 1040. By the end of filling it out, you'll know how much tax you owe, or what your refund is.
  8. Personal Finance

    8 Little-Known Tax Deductions And Credits

    These little-known tax deductions can lead you to finding your own unique expenses that you didn't know you could claim.
  9. Personal Finance

    Major Tax Credits Expiring In 2013

    Here are the major changes and tips that you need to know before filing your taxes for 2013.
  10. Personal Finance

    7 Expenses You Won’t Believe Are Deductible

    You may be surprised at some of the things that qualify as legitimate tax deductions. Here are seven that are especially quirky.
RELATED FAQS
  1. How do I know whether to itemize deductions or take the standard deduction?

    Taking the standard deduction is the easiest and most common method chosen by filers, but many taxpayers may wind up paying ... Read Answer >>
  2. What’s the difference between IRS Forms 1040 and 1040EZ?

    Though very similar, the differences between the 1040 and 1040EZ Forms are significant when it comes to filing your tax return. ... Read Answer >>
  3. What are the deductions taken to determine AGI (adjusted gross income)?

    Read more about the deductions taken to arrive at adjusted gross income, or AGI, including the differences between above ... Read Answer >>
  4. Why does GAAP require accrual basis rather than cash accounting?

    Discover why GAAP requires the accrual basis for accounting rather than the cash basis, and learn why it is important for ... Read Answer >>
  5. Who's required to fill out a Schedule C IRS form?

    Find out if you're required to use a IRS Schedule C form when completing your tax return this year. Read Answer >>
  6. Why does the Internal Revenue Service (IRS) care about accounting practices?

    Learn why the Internal Revenue Service cares about accounting practices, as these ensure the accurate reporting of financial ... Read Answer >>
Hot Definitions
  1. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  2. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  3. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
  4. Underweight

    1. A situation where a portfolio does not hold a sufficient amount of a particular security when compared to the security's ...
  5. Russell 3000 Index

    A market capitalization weighted equity index maintained by the Russell Investment Group that seeks to be a benchmark of ...
  6. Enterprise Value (EV)

    A measure of a company's value, often used as an alternative to straightforward market capitalization. Enterprise value is ...
Trading Center