{"id":38979,"date":"2025-09-24T11:53:17","date_gmt":"2025-09-24T11:53:17","guid":{"rendered":"https:\/\/docs.daftra.com\/tutorial\/%d8%b7%d8%b1%d9%8a%d9%82%d8%a9-%d9%85%d8%b9%d8%a7%d9%84%d8%ac%d8%a9-%d9%88%d8%a5%d8%ab%d8%a8%d8%a7%d8%aa-%d8%b6%d8%b1%d9%8a%d8%a8%d8%a9-%d8%a7%d9%84%d8%af%d8%ae%d9%84\/"},"modified":"2025-12-03T07:32:05","modified_gmt":"2025-12-03T07:32:05","slug":"%d8%b7%d8%b1%d9%8a%d9%82%d8%a9-%d9%85%d8%b9%d8%a7%d9%84%d8%ac%d8%a9-%d9%88%d8%a5%d8%ab%d8%a8%d8%a7%d8%aa-%d8%b6%d8%b1%d9%8a%d8%a8%d8%a9-%d8%a7%d9%84%d8%af%d8%ae%d9%84","status":"publish","type":"tutorial","link":"https:\/\/docs.daftra.com\/en\/tutorial\/%d8%b7%d8%b1%d9%8a%d9%82%d8%a9-%d9%85%d8%b9%d8%a7%d9%84%d8%ac%d8%a9-%d9%88%d8%a5%d8%ab%d8%a8%d8%a7%d8%aa-%d8%b6%d8%b1%d9%8a%d8%a8%d8%a9-%d8%a7%d9%84%d8%af%d8%ae%d9%84\/","title":{"rendered":"How to Record and Account for Income Tax"},"content":{"rendered":"<h3 style=\"text-align: left;\"><strong data-start=\"160\" data-end=\"192\">Create an Income Tax Account<\/strong><\/h3>\n<ol>\n<li dir=\"ltr\" style=\"text-align: left;\">From the <strong data-start=\"209\" data-end=\"230\">Chart of Accounts<\/strong> under <strong data-start=\"237\" data-end=\"251\">Accounting<\/strong><\/li>\n<li dir=\"ltr\" style=\"text-align: left;\" data-start=\"123\" data-end=\"184\">Select <strong data-start=\"130\" data-end=\"145\">Liabilities<\/strong>, then click <strong data-start=\"158\" data-end=\"181\">Current Liabilities<\/strong>.<\/li>\n<li dir=\"ltr\" style=\"text-align: left;\" data-start=\"187\" data-end=\"231\">Create a new account named <strong data-start=\"214\" data-end=\"228\">Income Tax<\/strong>.<\/li>\n<\/ol>\n<h3 dir=\"ltr\" style=\"text-align: left;\"><strong data-start=\"342\" data-end=\"372\">Close the Financial Period<\/strong><\/h3>\n<ol>\n<li dir=\"ltr\" style=\"text-align: left;\" data-start=\"380\" data-end=\"458\">At year-end, close all revenue and expense balances in the income statement.<\/li>\n<li dir=\"ltr\" style=\"text-align: left;\" data-start=\"464\" data-end=\"542\">Transfer the net result (profit or loss) to <strong data-start=\"508\" data-end=\"529\">Retained Earnings<\/strong> in Equity.<\/li>\n<\/ol>\n<ul>\n<li dir=\"ltr\" style=\"text-align: left;\">For more details, see the guide of <a href=\"https:\/\/docs.daftra.com\/en\/tutorial\/closing-the-financial-year\/\">closing the fiscal year<\/a>.<\/li>\n<\/ul>\n<h3 dir=\"ltr\"><strong>Record the Accrued Income Tax<\/strong><\/h3>\n<ul dir=\"ltr\" style=\"text-align: left;\" data-start=\"661\" data-end=\"799\">\n<li data-start=\"661\" data-end=\"799\">\n<p data-start=\"663\" data-end=\"729\">After calculating the income tax due, create this journal entry:<\/p>\n<ul data-start=\"735\" data-end=\"799\">\n<li data-start=\"735\" data-end=\"767\">\n<p data-start=\"737\" data-end=\"767\"><strong data-start=\"737\" data-end=\"747\">Debit:<\/strong> Retained Earnings<\/p>\n<\/li>\n<li data-start=\"773\" data-end=\"799\">\n<p data-start=\"775\" data-end=\"799\"><strong data-start=\"775\" data-end=\"786\">Credit:<\/strong> Income Tax<\/p>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p dir=\"ltr\">This reflects that tax is deducted from retained earnings and recognized as a liability.<\/p>\n<h3 style=\"text-align: left;\"><strong>Record the Tax Payment<\/strong><\/h3>\n<ul dir=\"ltr\" style=\"text-align: left;\" data-start=\"931\" data-end=\"1072\">\n<li data-start=\"931\" data-end=\"1072\">\n<p data-start=\"933\" data-end=\"1005\">When the tax is actually paid to the Tax Authority, record this entry:<\/p>\n<ul data-start=\"1011\" data-end=\"1072\">\n<li data-start=\"1011\" data-end=\"1036\">\n<p data-start=\"1013\" data-end=\"1036\"><strong data-start=\"1013\" data-end=\"1023\">Debit:<\/strong> Income Tax<\/p>\n<\/li>\n<li data-start=\"1042\" data-end=\"1072\">\n<p data-start=\"1044\" data-end=\"1072\"><strong data-start=\"1044\" data-end=\"1055\">Credit:<\/strong> Bank (or Cash)<\/p>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p style=\"text-align: left;\">.This clears the liability and shows the payment from your bank<\/p>\n","protected":false},"author":29,"featured_media":0,"template":"","categories":[],"tags":[],"class_list":["post-38979","tutorial","type-tutorial","status-publish","hentry"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v17.8 - 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