Income Tax Payable
Candlefocus EditorThere are several different types of taxes within the US such as federal income tax, state income tax, local taxes, and taxes imposed by other jurisdictions. Income tax payable on a balance sheet reflects the exact amount that the business will owe and is due within twelve months. The amount of taxes due may be calculated different ways depending on the circumstances and types of income involved.
For small business owners and those who operate as sole proprietors, estimated taxes are paid quarterly by filing Form 1040-ES, widely referred to as "estimated taxes." Employers and employees pay taxes via withholding taxes, which is a form of payments made as part of a loan to the government. The amount of taxes to be withheld is determined by the filing classification and withholding allowances that are provided on the W-4 form, which should be given to employers.
Businesses that are paying income tax must comply with reporting and payment requirements of IRS, or the Internal Revenue Service. All businesses are required to pay estimated taxes and file Form 1040-ES for the financial period in question. Additionally, all businesses must also file Form 1040 or 1040-X each year. The filing deadline is normally April 15 every year.
In conclusion, Income Tax Payable is a current liability on the balance sheet and represents taxes due to federal, state and local governments for a given period. The amount due is calculated depending on the income and types of taxes involved. Businesses must meet their reporting and payment requirements to IRS which is the Internal Revenue Service. Tax payment obligations must be met to avoid penalties and interest.