What is the cause for tax payable account?

vicki: What is the cause for tax payable account?
What might be the reasons for the tax payable account? Why don’t the company pay the tax right away but have to wait for some time and pay it in the future? Deferred tax asset result from an excess of tax payable over income tax expense. Does it mean the company paid tax more than it should have paid? I just got a bit confused of it. How could this siutation happen in real life? Could you explain it to me by giving the example? Thank you very much.

Answers and Views:

Answer by busymomkaren
The IRS dictates how and when businesses turn in the tax money they collect from the employees’ paychecks. Depending on how much you collect, you are either a weekly, semimonthly, monthly or quarterly depositer. Most are monthly. In order to make the IRS bookkeeping easier, they would rather you pay one lump sum each month instead of every time you write a paycheck. Especially since if you made a mistake and had to rewrite a check you would have to change the deposit. it is much easier to just make one monthly deposit. Deferred tax asset resulting from an excess of payable over expense means you paid too much taxes in, but rather than receiving a refund you just get credit toward the next payment. it happens on a fairly regular basis. each business has it happen at least once in their life.