Is income tax an expense or liability?

Income taxes may be referring to any of the following:

  • The income tax expense that is reported on a corporation's income statement and which pertains to the revenues and expenses shown on the income statement based on generally accepted accounting principles
  • The income tax shown on the corporation's income tax return, which pertains to the revenues and expenses reported on the income tax return based on the income tax regulations and rulings
  • The income taxes that are payable to the federal and state governments and are reported as a current liability on the corporation's balance sheet
  • The amount of federal and state income taxes that the corporation had overpaid and which are reported as a receivable in the current asset section of the balance sheet
  • The deferred income taxes which involve the difference in the time when an item is reported on the income tax return and the time it is reported on the corporation's income statement

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