099 Income Taxes – Current Year

Adjustments

 

Synopsis

Account 099, Income Taxes – Current Year, is established to record the amount of Income Tax or estimated Income Tax due for Federal, State and/or Local Income Taxes.  Professional tax and accounting advice should be obtained regarding the proper handling of Income Taxes due.

Debits

Credits

  1. The monthly estimate of federal, State, and/or Local Income Tax

  2. The amount to increase the income tax liability based on the final adjusted taxable income for the year

 

  1. The amount to decrease the income tax liability based on the final adjusted taxable income for the year

 

Example 1

Record the monthly accrual of $93,750 for the federal and state income taxes.

Journal: Standard Entries Journal

Entry:

 

Debit

Credit

Account 099

Income Taxes – Current Year

$93,750

 

Account 327

Income Taxes Payable

 

$93,750

Comments

An accrual should be set up by crediting Account 327 Income Taxes Payable with the estimated Income Taxes due.  The offsetting debit is posted to Account 099, Income Taxes – Current Year.

Note:

Quarterly payment and filing dates should be observed to avoid penalties and interest.