What is a postponed income tax?

The term Income tax is commonly used in accounting. They usually postponed income tax results if there are temporary differences between the total income recorded in the company's balance sheet and the amount of income for which the company must pay taxes for a certain period of time. The inclusion of postponed taxes on accounting statements can help companies explain future taxes that may owe government agencies.

Delayed income tax can be classified as delayed income tax or delayed income taxes. The accounting department can manage deferred tax obligations and assets in a way that helps maximize the company's income for accounting purposes. In addition, the accountant may try to minimize the income of the company for the purpose of tax liability in the fiscal tax year.

The company document deferred tax obligations and assets for several reasons. One of the key reasons is to ensure that investors and officers of the company and directors are educated for they will bethe same tax consequences for the company. In addition, this documentation makes it easy to inform companies about their deferred obligations and assets of income tax.

The response of the deferred income tax estimates the amount of future taxes that will be assessed from the income that has been reported in a statement on the company's financial statement, but has not yet been reported for income tax. In this situation, the income obtained from the accounting statement is higher than the taxable income of the company for the fiscal tax year. As a result, tax expenditures usually exceed payable taxes.

For example, the company may owe $ 1,000,000 in the US (USD) tax taxes. However, due to the tax regulations, the Company may be obliged to pay only $ 900,000 for taxes for the fiscal tax year. The remaining $ 100,000 from income is generally categoryorized in the company's books as delayed income taxes. Taxes then plath later.

Delayed tax asset can be stated in the balance sheet of the company in order to document a situation where the company is likely to reduce future income taxes as a result of the asset. In order to use the deferred tax asset, the company first deducted the costs of its accounting books. Tax relief is then provided later.

For example, a company may have a postponed tax asset of $ 10,000 USDs listed in his books. If the company earns $ 50,000 in income before tax, the company can deduct a deferred tax asset $ 10,000 out of total taxable income. As a result, the company is obliged to pay taxes for only $ 40,000.