Deferred Income Tax


DEFINITION of 'Deferred Income Tax'

A liability recorded on the balance sheet that results from income already earned and recognized for accounting, but not tax, purposes. Also, differences between tax laws and accounting methods can result in a temporary difference in the amount of income tax payable by a company. This difference is recorded as deferred income tax.


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BREAKING DOWN 'Deferred Income Tax'

In other words, this would mean that income has been realized, but the tax on that income has not.

For example, let's say that the amount of tax that a business should pay is $100,000, but due to tax laws, the amount actually payable for this fiscal year is $85,000. The additional $15,000 would be a deferred income tax liability that the company would need to pay later on.

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  2. Revenue Act Of 1862

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  3. Income Tax

    A tax that governments impose on financial income generated by ...
  4. Accounting

    The systematic and comprehensive recording of financial transactions ...
  5. Fiscal Year - FY

    A period that a company or government uses for accounting purposes ...
  6. Generally Accepted Accounting Principles ...

    The common set of accounting principles, standards and procedures ...
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