How will direct deposit work on Jan. 1?

[floridafam]

If you happen to get paid on Jan. 1, how will direct deposit work? We usually get it early but early this time would mean a different year. Would that paycheck count toward 2009 wages?

I'm having difficulty figuring this out when the answer is probably very simple.

 

[Wall-E1]

If you happen to get paid on Jan. 1, how will direct deposit work? We usually get it early but early this time would mean a different year. Would that paycheck count toward 2009 wages?

I'm having difficulty figuring this out when the answer is probably very simple.

Direct Deposit will not work on January 1st. The world's economy will collapse as a result.

But seriously, if the paycheck is dated 2009 it will count towards this year and your W-2 will reflect that.

 

[Mickey's Minion]

If you happen to get paid on Jan. 1, how will direct deposit work? We usually get it early but early this time would mean a different year. Would that paycheck count toward 2009 wages?

I'm having difficulty figuring this out when the answer is probably very simple.

If payroll is cut January 1 (or 2nd), that income will be part of your 2010 income.

If you get paid on December 31, that income will be reported as your 2009 income.

Other examples, pay your mortgage on Dec. 31 instead of Jan. 1 to get the interest credit for 2009.

If you have maxed out Social Security for 2009, if you get paid on Dec. 31, they won't take out SS. If you get paid on Jan. 1, SS will again begin to be taken out.

 

[Kitzka]

at my company the jan 1 pay check is for the last pay period for 2009 so we are getting paid on dec 31. but it will be a little less as it will end on the 31st. our check on the 15th will be for a little more as this pay period will have 1 extra day.

DH company is switching to a different pay schedule and was suppose to get paid on jan 1 but instead will be getting paid on jan 4. this is also the last pay period for the year for him.

i think it will vary by company and something your HR dept will know better than us on the boards.

 

[Judy in Texas]

If you happen to get paid on Jan. 1, how will direct deposit work? We usually get it early but early this time would mean a different year. Would that paycheck count toward 2009 wages?

I'm having difficulty figuring this out when the answer is probably very simple.

Taxable income is reported for the year in which it is paid. If you are paid on 12/31 and that is the date on the pay stub, then it is tax year 2009.

 

[pozey]

How do you normally get paid? The 1st of each month? The 15th & 30th? Every Friday?

USUALLY...and I'm only speaking from MY personal experience...if my normal payday falls on a holiday...I get paid the day before. So, in this case, if my normal payday was Friday, January 1....then the direct deposit would be deposited in my bank on December 31st.

HOWEVER...for ACCOUNTING purposes...my place of employment would still use January 1 as the pay date. And more than likely would be counted as 2010 income.

Confused?

 

[1957]

My retirement check is always directly deposited on the last business day of the month. Can be anywhere from the 26th to the 31st. My SS check is deposited on the fourth Wednesday of the month. If that Wednesday is a Holiday (mainly Christmas/New Year's), it is deposited the day before.

 

[Golf4food]

We are being paid on the 31st and it will count as 2009 income - so we technically will receive 27 paychecks in 2009 instead of the usual 26, which is cool.

 

[floridafam]

Thanks. I just couldn't wrap my brain around this one. I guess we will find out Thursday or Friday. It doesn't matter to us what day it is paid. I just happened to ask DH when he thought it would be paid and it's just stuck in my head.

 

[barkley]

my former employer/current pension provider went round and round on this back in the pre direct deposit days (payroll hated it in december).

they finaly were advised by that state's franchise tax board and the irs that they were to date and process the checks the same way they would if they were hand issued and follow the financial institution's procedure for direct deposit. so while my/dh's pension checks will be dated 1/1/10 and will be 2010 taxable income, because of the bank holiday they will be deposited and available on 12/31/09. NOW this is the policy of the bank we use, and seems to be the policy of most major banks BUT it is'nt nesc. the policy of all financial institutions. i had co-workers and co-pensioners who found b/c they used some smaller very local banks and credit unions for their direct deposits, although the funds were technicaly in their accounts on the 31st of a given month they were not allowed to access them until the first banking day following (the banks/cu's said that technicaly the payroll/pension checks were'nt valid until the date they were drawn for-the first of the following month and they would'nt release funds on 'post dated checks').

 

[m&m's mom]

Bottom line:
Banks and Federal Reserve are closed on 1/1 so no posting or processing.
IRS cares about paydate and not period ending so if checks/dir dep are dated 12/31/09- they will be on 2009 W2.