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Entry for Provision for Income Taxes?
You will need two accounts: Income tax expenses (an expense account, obviously) Provision for income tax (a liability account) You will simply: debit provision for income tax credit income tax expenses When actually paying income tax, you will: debit cash credit provision for income tax
What if income tax provision is higher than deferred income tax?
You may not understand what your asking, in provision and "tax" are 2 different things. Provision is a purely accounting (GAAP) term. it has nothing to do with IRS tax really. It isn't even part of IRS vernacular really. An Income Tax Provision basically has 2 components; Deferred Tax Provision & Current Tax Provision. (Some ancillary accounting lines may have to do with credits and tax effect of state tax deduction for example). The total income tax provision is the combination of the 2. If current tax provision is higher than deferred tax provision, than the deferred tax provision is a tax benefit. A very common thing that happens when tax accounting requires a provision be recorded for income recorded for GAAP before it is income for tax.
How you Calculate Provision for Income tax?
how to calculate provison for income tax
What is the accounting entry for the Provision of Income Tax?
dr. income tax expense cr. income tax payable
How do you treat over or under provision of income tax?
Best way to understand is through an example: If in 2010 you have a provision for tax of $2,000 payable for accounting. However the actual tax paid was $1,500. You would have an over provision of income tax. So once the tax is paid in 2011 it will Dr Provision Cr Bank. So in 2011 the amount of the over provision must be adjusted by: Dr Provision for tax Cr Income tax expense This will clear out the tax provision for 2011 resulting from the over provision. Same concept applies to under provsions.
Entry for Provision for Income Taxes?
You will need two accounts: Income tax expenses (an expense account, obviously) Provision for income tax (a liability account) You will simply: debit provision for income tax credit income tax expenses When actually paying income tax, you will: debit cash credit provision for income tax
What if income tax provision is higher than deferred income tax?
You may not understand what your asking, in provision and "tax" are 2 different things. Provision is a purely accounting (GAAP) term. it has nothing to do with IRS tax really. It isn't even part of IRS vernacular really. An Income Tax Provision basically has 2 components; Deferred Tax Provision & Current Tax Provision. (Some ancillary accounting lines may have to do with credits and tax effect of state tax deduction for example). The total income tax provision is the combination of the 2. If current tax provision is higher than deferred tax provision, than the deferred tax provision is a tax benefit. A very common thing that happens when tax accounting requires a provision be recorded for income recorded for GAAP before it is income for tax.
What is the difference between Income Tax and Provision of Income Tax?
Provision for income tax refers to the line item in the profit and loss statement. Income tax is a broad term and could mean current taxes (taxes actually payable to Government), Tax expenses/provision for tax- taxes reported in the P&L or deferred taxes (difference between current taxes and tax expense).
How you Calculate Provision for Income tax?
how to calculate provison for income tax
What is the accounting entry for the Provision of Income Tax?
dr. income tax expense cr. income tax payable
How do you treat over or under provision of income tax?
Best way to understand is through an example: If in 2010 you have a provision for tax of $2,000 payable for accounting. However the actual tax paid was $1,500. You would have an over provision of income tax. So once the tax is paid in 2011 it will Dr Provision Cr Bank. So in 2011 the amount of the over provision must be adjusted by: Dr Provision for tax Cr Income tax expense This will clear out the tax provision for 2011 resulting from the over provision. Same concept applies to under provsions.
Is provision for income tax a balance sheet item?
Yes.
What does Tax provision package mean?
examples: "provide assistance on the Tax Provision Package and FAS 109"; "to complete a US GAAP Tax Provision package".
Journal entry income tax paid from own account?
Accounting Treatment relating to Income Tax is as follows:(1) At the time of paying advance tax:Advance Income Tax Paid A/c Dr.To Bank A/c(2)At the time of making provision for Income tax Liability:Profit & Loss A/c Dr.To Provision for Income Tax A/cFrom here onwards you will have to make proper assessment year wise reconciliation of both the accounts ie Advance Income Tax Paid A/c & Provision for Income Tax A/c. This is to be noted that every Assessment Year is separate in Income Tax. (This is to be noted that in case of an assessee who is not in default Advance Tax deposited will always be greater or equal to Provision for Income Tax. Provision for Income Tax is nothing but current Tax as per the AS-22.)(3) At the time of making self assessment payment, the entry will be same as in (1) but the narration will mention that it is a self assessment tax for the AY 200X-XX.(4) when the Assessment gets completed there are few situations arises:when our income is assessed without making any dis-allowance & charging any interest :Provision for Income Tax A/c Dr.To Advance Income Tax Paid(with the amount of Provision for Income Tax for the AY 200X-XX)when our income is assessed without making any disallowance but after charging interest eg u/s 234 : In this case the AO will issue the Demand letter u/s 156 for the payment of tax calculated under assessement , because as per rule tax paid is first adjusted towards the amount of interest due. He can also adjust this amount with any other refund which might due to you in respect of any other Assessment Year.Along with the entry passed under situation (a) , the following entries will be passedInterest Paid - Others A/c Dr.To Bank A/cIn case it is adjusted with the refund of any other Assessment Year, then the entry will be:Interest Paid - Others A/c Dr.To Advance Income Tax PaidIn this case you must make it sure that the narration clearly mentions the assessment year of which refund is adjusted against the demand. Also you will have to make proper adjustment in your reconciliation of Advance Income Tax A/c & Provision for Income Tax A/c in concerned AY.(c) When Income is assessed with some dis-allowance & Interest payable:This means that we have to pay tax demanded by AY.Income Tax Provision A/c Dr.To Advance Income Tax Paid A/c(with the amount provided for the respective Assessment Year)Income Tax Provision for earlier years - Written Back A/c Dr.Interest paid - Others A/c Dr.To Bank A/c (if paid through Bank)To Advance Income Tax Paid A/c (if adjusted by AO with refund of other AY)(with the amount of Additional Income Tax Liability arises on assessment & Interest payable )# This is to be noted that refund is not an Income from the Assessee point of view, However the interest received on refund is indirect income to be shown under other incomes.In (ii) Case, if there is interest on refund which is also adjusted with the tax demand then the entries will be:Income Tax Provision for earlier years - Written Back A/c Dr.Interest paid - Others A/c Dr.To Bank A/c (if paid through Bank)To Advance Income Tax Paid A/c (if adjusted by AO with refund of other AY)To Other Income (with amount of Interest recd. on refund which is adj. against tax demand)(with the amount of Additional Income Tax Liability arises on assessment & Interest payable )Note:- This is to be noted that in case tax on returned income is not equal to Current Tax Provision for the year, then you will have to pass the following entries to make it equal to tax on returned income (Reason for inequality may be the mistake or error that might have occurred at the time of making provision).Case (a) - When tax on returned income is more:It means you have made less provision for the Assessment Year, now you have to make the remaining provision. Now the entry will be:Income Tax Provision for earlier years - Written Back A/c Dr.To Provision for Income Tax A/cCase (b) - When tax on returned income is less:Just pass the reverse entry as passed in case (a)
How do you do income tax?
Is something missing from this question? It doesn't make a lot of sense. Do you mean how do you avoid income tax? Do you mean how does the government tax income? Do you mean, how do you caluclate the amount of income tax that you will have to pay?
Whether TDS is deductible on donation paid?
No as per income tax act, there is no provision which say for deduction of tax on donation paid.
Where can one find information about income tax provisions?
One can find information about income tax provision online. Some of the useful websites are Small Business, Bricker, Dummies, Corptax, Tax Stream and Jstor.
