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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.
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 $,, but due to tax laws, the amount actually payable for this fiscal year is $,. The additional $, would be a deferred income tax liability that the company would need to pay later on.
A liability recorded on the balance sheetthe result from income already earned & recongnized for accounting, but not tax purpose.also,difference between tax laws and accounting methods can result in a temporary difference in the amount of income tax payable by a compny. this difference is recorded deferred incom tax.
