What Should I do if my Child Earns Taxable Income?

Taxable profit, also known as taxable income, is the balance of the total corporate income for each tax year minus the allowable deduction items. It is calculated by income tax accounting, and its basis for recognition, measurement, and reporting is tax law and related regulations. The definition of income and deductible items is the definition and characteristics of income and expenses stipulated by tax law.

Taxable profit

Right!

Taxable profit, also known as taxable income, is the balance of the total corporate income for each tax year minus the allowable deduction items. It is calculated by income tax accounting, and its basis for recognition, measurement, and reporting is tax law and related regulations. The definition of income and deductible items is the definition and characteristics of income and expenses stipulated by tax law.

When the company performs accounting,

1. Can the problem of the relevance of accounting information be solved solely by separating accounting profits from taxable profits? Traditional financial accounting is based on accrual basis and historical cost measurement. The main reason that affects the relevance of accounting information comes from accrual basis and historical cost measurement. Cash flow recognized on an accrual basis is a conceptual cash flow that is inconsistent with the actual cash flow; in response to this problem, a cash flow accounting was created alongside traditional financial accounting. The accounting information provided by historical cost measurement only reflects the past situation, and the most relevant to decision makers should be the accounting information that reflects the status quo. In response to this problem, another price change accounting has been created alongside traditional accounting. Therefore, to solve the relevance of accounting information, we must rely on cash flow accounting and price change accounting. Since cash flow accounting and price change accounting are still in the exploratory stage, why can't we tolerate the damage to the relevance of information from accounting profits and taxable profits?

2. It is unrealistic to position our accounting goals to provide objective and fair decision-related information. On the one hand, China's accounting is still essentially traditional financial accounting based on accrual basis and historical cost measurement. Cash flow accounting and price change accounting have not been on the agenda. As previously analyzed, relying only on accrual basis and historical cost measurement cannot provide real decision-making related information. On the other hand, from the status quo in China, policy makers do not rely on accounting information to make decisions. The so-called relevance of decisions is just the unrequited love of accountants. The real role of accounting information is only two, one is to reflect the responsibility of property management; the other is to meet the needs of taxation. Many companies will cancel their accounting work if they do not pay taxes and do not reflect responsibility for their operations. This is the case for many self-employed companies that implement a fixed tax. Since accrual accounting and historical cost measurement cannot resolve the relevance of accounting information, and the main purpose of accounting information in China is to reflect operational responsibility and meet tax needs, it is a mistake to position accounting goals to provide objective and fair accounting information of. In our opinion, the right choice should be: to reflect responsibility for property management and to provide information for tax purposes. In this case, accounting profits and taxable profits should be unified.