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Deferred tax is a notional asset or liability to reflect corporate income taxation on a basis that is the same or more similar to recognition of profits than the taxation treatment. Deferred tax liabilities can arise as a result of corporate taxation treatment of capital expenditure being more rapid than the accounting depreciation treatment ...
In its simplest form, a deferred tax asset is an item on your company’s books that represents a future tax benefit, which you can claim in an upcoming tax return. It arises when an organization ...
But while tax-deferred accounts and tax-exempt accounts have some similarities, they are used for different purposes — and choosing one or the other can have big implications on your tax bill ...
When it comes to a company's taxes, there are two important categories to understand: assets and liabilities. Tax liability is anything that a person or company owes taxes on, such as income or ...
Some employers may disallow one, several, or all of the previous hardship causes. To maintain the tax advantage for income deferred into a 401(k), the law stipulates the restriction that unless an exception applies, money must be kept in the plan or an equivalent tax deferred plan until the employee reaches 59 + 1 ⁄ 2 years of age.
On the other hand, some people (primarily business owners) may choose to do the opposite of deferring their tax liabilities by "prepaying" personal income tax that would otherwise be payable in future years. For example, if it is known that tax rates will be increasing in a future tax year, a business owner can reduce his total tax liability by ...
Tax-advantaged retirement accounts where contributions may be tax-deductible, and growth is tax-deferred until withdrawal. Retirement plans such as a 401(k) and 403(b)
The result is a gap between tax expense computed using income before tax and current tax payable computed using taxable income. This gap is known as deferred tax. If the tax expense exceeds the current tax payable then there is a deferred tax payable; if the current tax payable exceeds the tax expense then there is a deferred tax receivable.