Can I Deduct Bad Debts?

If you report income and deductions on the CASH basis, you cannot deduct debts for customers who have not paid you, since you never included that income in your tax return to begin with.

If you report on the accrual basis (i.e., record income as earned), you can take a deduction for your actual debts that have become collectible.

(c) Copyright 1995-2015 by TaxLogic