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Fiscal or calendar year for accounting? And can you change it later?

Date: 02/09/2006 | Category: QuickBooks | Author: John Vanhara

Here is some information form IRS regarding Calendar Year vs. Fiscal Year“A year is a year, right? Yes and no. Different types of businesses may use different types of “tax years” when it comes to figuring taxable income. A tax year is an annual accounting period for keeping records and reporting income and expenses.A calendar year runs from January 1 through December 31. Generally, anyone can adopt a calendar year for his or her tax returns. In some cases, you may be required to adopt a calendar year.

Some businesses have “seasons” that don’t follow the traditional calendar. If your business will have such seasons, you may be eligible to use a fiscal year that ends on the last day of a month other than December.

Generally, whether you choose a calendar year or a fiscal year, you must use it on your first tax return, and for all subsequent tax returns unless you get IRS approval to change your tax year. You can request a change in your tax year by filing Form 1128, “Application to Adopt, Change, or Retain a Tax Year.”

 

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