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Tax Expense

Definition

A company's tax expense, or tax charge, is the income before tax multiplied by the appropriate tax rate. Generally, companies report income before tax to their shareholder under generally accepted accounting principles. However, companies report income before tax to their government under tax law.

What is a 'Tax Expense'

A tax expense is a liability owing to federal, state/provincial and municipal governments. Tax expenses are calculated by multiplying the appropriate tax rate of an individual or business by their income before taxes, after factoring in such variables as non-deductible items, tax assets and tax liabilities.

Explaining 'Tax Expense'

Determining the appropriate tax rate and identifying the correct accounting methods for items affecting one's tax expense are carefully described by tax authorities such as the IRS and GAAP/IFRS.


Further Reading


Tax planning, regulatory capital planning, and financial reporting strategy for commercial banks
academic.oup.com [PDF]
… Tax Planning, Regulatory Capital Planning, and Financial Reporting Strategy for Commercial Banks … of Chicago, The University of Michigan, the National Bureau of Economic Research, Northwestern … Author Notes. The Review of Financial Studies, Volume 3, Issue 4, October …

A review of tax researchA review of tax research
www.sciencedirect.com [PDF]
… Tax Planning, Regulatory Capital Planning, and Financial Reporting Strategy for Commercial Banks … of Chicago, The University of Michigan, the National Bureau of Economic Research, Northwestern … Author Notes. The Review of Financial Studies, Volume 3, Issue 4, October …

Lost in translation: Detecting tax shelter activity in financial statementsLost in translation: Detecting tax shelter activity in financial statements
www.jstor.org [PDF]
… Tax Planning, Regulatory Capital Planning, and Financial Reporting Strategy for Commercial Banks … of Chicago, The University of Michigan, the National Bureau of Economic Research, Northwestern … Author Notes. The Review of Financial Studies, Volume 3, Issue 4, October …

Seeking shelter: Empirically modeling tax shelters using financial statement informationSeeking shelter: Empirically modeling tax shelters using financial statement information
meridian.allenpress.com [PDF]
… Tax Planning, Regulatory Capital Planning, and Financial Reporting Strategy for Commercial Banks … of Chicago, The University of Michigan, the National Bureau of Economic Research, Northwestern … Author Notes. The Review of Financial Studies, Volume 3, Issue 4, October …

The incentives for tax planningThe incentives for tax planning
www.sciencedirect.com [PDF]
… Tax Planning, Regulatory Capital Planning, and Financial Reporting Strategy for Commercial Banks … of Chicago, The University of Michigan, the National Bureau of Economic Research, Northwestern … Author Notes. The Review of Financial Studies, Volume 3, Issue 4, October …

Do personal taxes affect corporate financing decisions?Do personal taxes affect corporate financing decisions?
www.sciencedirect.com [PDF]
… Tax Planning, Regulatory Capital Planning, and Financial Reporting Strategy for Commercial Banks … of Chicago, The University of Michigan, the National Bureau of Economic Research, Northwestern … Author Notes. The Review of Financial Studies, Volume 3, Issue 4, October …

The economic effects of financial derivatives on corporate tax avoidanceThe economic effects of financial derivatives on corporate tax avoidance
www.sciencedirect.com [PDF]
… Tax Planning, Regulatory Capital Planning, and Financial Reporting Strategy for Commercial Banks … of Chicago, The University of Michigan, the National Bureau of Economic Research, Northwestern … Author Notes. The Review of Financial Studies, Volume 3, Issue 4, October …

The effects of tax increment financing on economic developmentThe effects of tax increment financing on economic development
www.sciencedirect.com [PDF]
… Tax Planning, Regulatory Capital Planning, and Financial Reporting Strategy for Commercial Banks … of Chicago, The University of Michigan, the National Bureau of Economic Research, Northwestern … Author Notes. The Review of Financial Studies, Volume 3, Issue 4, October …

Using tax return data to simulate corporate marginal tax ratesUsing tax return data to simulate corporate marginal tax rates
www.sciencedirect.com [PDF]
… Tax Planning, Regulatory Capital Planning, and Financial Reporting Strategy for Commercial Banks … of Chicago, The University of Michigan, the National Bureau of Economic Research, Northwestern … Author Notes. The Review of Financial Studies, Volume 3, Issue 4, October …

Firms' off‐balance sheet and hybrid debt financing: Evidence from their book‐tax reporting differencesFirms' off‐balance sheet and hybrid debt financing: Evidence from their book‐tax reporting differences
onlinelibrary.wiley.com [PDF]
… Tax Planning, Regulatory Capital Planning, and Financial Reporting Strategy for Commercial Banks … of Chicago, The University of Michigan, the National Bureau of Economic Research, Northwestern … Author Notes. The Review of Financial Studies, Volume 3, Issue 4, October …



Q&A About Tax Expense


When calculating your personal or business' tax expenses what should you consider first?

You should consider the appropriate tax rate first.

What is tax expense?

Tax expense is a liability owing to federal, state-provincial and municipal governments.

What does tax expense represent?

Tax expense represents the amount of taxes owed by an individual or business.

How do you calculate your personal or business' tax expenses?

You multiply the appropriate tax rate by your income before taxes, after factoring in non-deductible items, assets and liabilities.

Who calculates tax expenses?

The appropriate tax rate and accounting methods are carefully described by authorities such as the IRS and GAAPIFRS.

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