Payments of Income Tax & Account Reconciliation

Cash tax payments are recorded as debits against income taxes currently payable. Upon completion of a given income tax return, a provision-to-return true-up entry should be calculated to account for differences between the tax provision estimated at the end of the fiscal year and the actual tax return filed. The true-up entry is typically recorded in the interim period in which the return is completed.

After the completion of the true-up, the income taxes currently payable account should be reconciled to validate that for each income tax return, the balance agrees to the refund or amount payable on the return.