Future Income Tax


DEFINITION of 'Future Income Tax'

Income tax that is deferred because of discrepancies between a company's tax return and the tax calculated on the company's financial statements. Future income tax occurs when there is a greater amount of deductions on taxable income than on the net income that is calculated on a company's income statement.

BREAKING DOWN 'Future Income Tax'

In simple terms future income tax is an adjustment accounting for the difference between what the company has already paid in taxes on the current income and what they will have to pay in the future for this income. This difference occurs because companies are taxed by government in a different way than from the way they calculate tax on their accounting records.

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  1. How long do I need to keep income tax records?

    Keep all tax-related records for at least three years. For example, keep your 2015 tax return, filed in early 2016, at the ... Read Full Answer >>
  2. Are estate distributions taxable?

    In general, most estate distributions are not subject to income tax. In some cases, however, a distribution from an estate ... Read Full Answer >>
  3. Are Cafeteria plans taxable?

    Whether the benefits you receive through your employer-sponsored cafeteria plan are taxable depends entirely on which benefits ... Read Full Answer >>
  4. How do I read and analyze an income statement?

    The income statement, also known as the profit and loss (P&L) statement, is the financial statement that depicts the ... Read Full Answer >>
  5. Do dividends affect working capital?

    Regardless of whether cash dividends are paid or accrued, a company's working capital is reduced. When cash dividends are ... Read Full Answer >>
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    Prepayments, or prepaid expenses, are typically included in the current assets on a company's balance sheet, as they represent ... Read Full Answer >>

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