For tax purposes, we report on cash basis, but can we still deduct a 401K contribution relating to the tax year, but made in the following year?

Home » Questions » For tax purposes, we report on cash basis, but can we still deduct a 401K contribution relating to the tax year, but made in the following year?

Yes, if for example, your company year-end is December 31, 2020 and your tax return reflects cash basis numbers – even if you make a 401K company contribution in 2021, prior to filing of your company’s 2020 tax return, those 2020 contributions would be considered a deduction on your 2020 business tax return.

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