Accounting

We answer your accounting questions.

Over 500 questions have been answered on our accounting blog. Click here to suggest a question.



April 15, 2009

Is income tax an expense or liability?

The income tax reported on the income statement is the income tax expense which pertains to the revenues and expenses shown on the income statement.

The income taxes to be paid in the near future are reported as a current liability.

If a corporation has overpaid its income taxes, the income taxes to be refunded by the government are reported on the corporation’s balance sheet as a current asset.

There are also balance sheet accounts for deferred income taxes. Deferred income taxes arise when a revenue or expense item is reported on the income tax return in a year that is different from the year the item appears on the financial statements.

More information is contained in Financial Accounting Standards Board Statement No. 109, Accounting for Income Taxes. It is available for reading at www.FASB.org/st.

Related Questions



Comments

11 Responses to “Is income tax an expense or liability?”

  1. khan on April 24th, 2009 2:13 pm

    This is one of the best sites for study of accounting specilay for students as well as for profinationals.Thanks

  2. asim razi on April 26th, 2009 3:35 am

    income tax is a liability because it impose on our operating activities when operating activity increases its means company earns more profit and on earning profit every company has to pay some amount of profit set by govt.

  3. PA SOLO on May 5th, 2009 6:30 am

    I found this site so interesting and highly educating.It gives me encouragement of updating my knowledge every blessed day.
    Thanks

  4. Kristie on May 7th, 2009 3:53 pm

    Income tax is a liability. Eventhough its listed on the income statement as an income tax expense.

  5. timah lecky on May 14th, 2009 3:48 am

    i always found this site very interesting and educating everyday. GOD blessed the accounting coach. keep it up.

  6. Keka on May 28th, 2009 8:57 pm

    A very informative and refreshing site.
    I am very interested in the topic”Accounting for Income Taxes”
    Thank you for offering these accounting knowledge for free.I find it very difficult to go back to uni because of financial constraints.
    This site has given me the opportunity to enhance my accounting skills free of charge.
    Thank you so much and indeed it is much appreciated.
    I will be logging into the offered web address.
    Thank you once again
    Kind Regards
    Keka

  7. Lady D on June 2nd, 2009 3:04 pm

    Hi ,
    I am writing from cameroom, i appreciate all what accounting coach is doing to improve my accouting knowledge.May God bless u for the good works.

  8. raihan on June 4th, 2009 12:40 pm

    thanks for increasing my knows

  9. Addi on June 9th, 2009 8:24 am

    What to Say Accounting Coach,

    It a free Tution for me I m learning day by day and getting basic byheart. Its a amazing sites for beginnner.

  10. mukasa on June 18th, 2009 4:52 am

    this is the best accounting assistant i have ever seen

  11. Cindy on July 26th, 2009 2:18 pm

    Can a corporation (1120 form) deduct as an expense the federal income tax paid (in a previous year) on current tax year filing ?

Leave a Reply