How to lessen the tax liability, so you can keep as much profit in your pocket as possible.
Current year tax
Current year tax is the tax you owe for a designated year. Bankrate explains.
What is current year tax?
Current year tax is the amount of tax payable that tax year. The span of time that comprises a tax year depends on the accounting method used, but with some exceptions all current year tax spans 52 or 53 weeks.
Current year tax amounts are computed each tax year. A tax year is a yearly accounting period during which companies or individuals keep records and make reports regarding income and expenses for the whole year. Taxes must be paid on income earned during the tax year the business indicated to the Internal Revenue Service (IRS).
The current year tax payable depends on two categories of tax years: the calendar year and the fiscal year. The calendar year refers to 12 consecutive months that begin on Jan. 1 and end on Dec. 31.
The fiscal year refers to 12 consecutive months that end on the final day of any month except December. The fiscal year may also follow a 52-53-week schedule, meaning that it runs for 52 to 53 weeks and can begin and end on any day of the month. Unless the taxpayer has a stipulated tax year, she may adopt one by filing the income tax return using that tax year.
If the current year lasts for less than 12 months, it is referred to as a short tax year. A taxable entity may be required to file a short-year tax return when the entity is converting its accounting period or wasn’t in existence for an entire tax year. The conditions that apply to figuring and filing the tax are the same as those that apply in computing the full current year tax.
Is your mortgage making it difficult to pay your taxes on time? You might consider refinancing it.
Current year tax example
Robert’s business earned $500,000 in taxable income. As registered with the IRS, Robert’s business adopted a fiscal-year schedule, choosing the dates June 15 one year to June 15 the following year. The $500,000 is recorded within that date range, so the business pays its full tax burden.
More From Bankrate
6 min read Aug 25, 2022
If you haven’t filed your taxes yet, don’t panic — but act fast.4 min read Apr 19, 2022
Typically, taxpayers have two options: Take the itemized deductions or take the standard deduction.3 min read Apr 18, 2022
Regardless of what may cause a person to miss the tax-filing deadline, there are potential consequences.5 min read Apr 18, 2022
Applying for more time to file your taxes is easy. Just don’t put off paying your tax bill.3 min read Apr 15, 2022
The fast-approaching deadline for filing your 2021 taxes is April 18, 2022.2 min read Apr 11, 2022
There are seven tax brackets for most ordinary income: 10%, 12%, 22%, 24%, 32%, 35% and 37%.4 min read Apr 07, 2022
The credit was confusing even before Congress revamped it for 2021.7 min read Apr 01, 2022
Here’s how to use a Roth IRA to pay for your child’s college tuition.4 min read Mar 28, 2022