Info 1: Income tax payable definition
Info 2: About income tax payable
Info 3: Income tax payable and Notes payable
Info 4: Example for income tax payable
Quick pick:
The amount of money that needs to be paid as levied for the earned income in less than a year is what is recorded as income tax payable.
Opening information:
Income tax payable breaks into three words income, tax, and payable. Income is earning, tax is a levy, and payable is debt. Income tax payable levy payment for the earning.
This article contained information about what is Income tax payable, how income tax payable works and functions in the public market, and what the difference between
Income tax payable and Notes payable, finally one brief example about the income tax payable.
Info 1: Income tax payable definition
Mr.Sunnil is the business person who runs the industry and it’s been surviving in the market for almost more than 23 years.
However, he is not only the shareholder of the company he just owns 2 percent of the shares among the whole ownership as a public organization. This year Sunnil industry re three types of income tax records and financial statements.
One is a tax payment that was paid or earned income this year, and another tax payment wasn’t paid to be paid more than the year for earnings from next year’s oil delivery. The third tax payment is not payment despite it being a refund from the tax department for overpaying taxes.
Among those three taxable income matters, here the tax payments that need to be paid within less than a year for advanced received earnings of next year’s delivery are recorded in the balance sheet of the company as income taxable payable in the liabilities section.
So let’s dive into how this income tax payable accounting term would be involved and impacted by the whole public market.
Info 2: About income tax payable
Income tax payable doesn’t represent any of the fixed things or objects instead it is one type of accounting term used in the balance sheet of public Corporations.
Such accounting terms of income tax payable demonstrate how much amount of money needs to be paid to the government in less than one year.
Supposedly if payment is made to the Internal Revenue Service or it had an exemption to not pay it’s not considered as income tax payables. When comes to income tax each of the incomes earned from different aspects would taxed at a distinct rate.
Therefore the corporations that have yet to pay the income tax department would required to pay such corporate short-term tax for the amount of time.
However until such tax not paid to the government, it is reported in the current liabilities of the balance sheet financial statement. Once it’s paid it is taken out from the current liabilities section.
Moreover, the income tax payable would be calculated based on how much amount of money that are taxable other than an exemption deduction multiple by the Corporate income tax rate.
Not all Corporations report this all the time in the balance sheet Current liabilities when the Company fails to acquire the amount for tax because of High expenses or need from non-tax exempt spending, mostly report the amount of money that needs to be paid to the income tax department.
This income tax payable term is not only applied to the equity companies who issue the shares of the Ownership despite investment banks and private financial institutions also exposed to this term to report liabilities payment of tax to its shareholders.
And most people confuse the income tax payable and notes payable so let’s jump into the key difference in it anyway.
Info 3: Income tax payable and Notes payable
Income tax payable refers to Payments demands from the Department of Income Tax in government, it doesn’t have any relation to debt payment or bond interest.
On the other side, notes payable refers to payments that need to be made by a Public Corporation in less than 100 days or a year for the bonds, debts, and loan interest.
So the key difference between income tax and notes payables is payments that occur for different purposes in Current liabilities. To make more sense of the income tax payable, see one brief example below.
Info 4: Example for income tax payable
Say company J is the tach industry which had all the 120 million dollars in income.
Among those paid about 30 million dollars in tax which is 25 percent.
Plus the company would have about 12 million dollars in income for next year’s product that was not yet delivered and a 1.2 million dollar interest payment for the bond.
Here the $12 million is recorded as income tax payable in the balance sheet and $1.2 million as notes payable.