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Tax PROVISION CALCULATION

TerriMej
Level 1

Is there a module to calculate tax provision

 

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IRonMaN
Level 15

You take book net income, add or subtract any book/tax differences and come up with a total.  Take that amount and multiply it by your state tax rate.  Subtract the state tax from your previous taxable income total and then multiply that new total by 21%.  You don't use averages or prior year rates.


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Just-Lisa-Now-
Level 15
Level 15
Im not sure what you mean by Tax Provision...what are you trying to accomplish?

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TerriMej
Level 1

I would like to be clear on the calculation for generating a corporate tax provision.  As I understand it, once you figure the profit before taxes, you multiply that by that tax rate to arrive at the tax provision.  However, is the tax rate percentage based on the average tax rate for the business in the prior 3 years? Or, is it calculated on the prior year tax rate?

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IRonMaN
Level 15

You take book net income, add or subtract any book/tax differences and come up with a total.  Take that amount and multiply it by your state tax rate.  Subtract the state tax from your previous taxable income total and then multiply that new total by 21%.  You don't use averages or prior year rates.


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IRonMaN
Level 15

No.  If you want to calculate a tax provision, you would need to to it manually or enter some rough numbers into a return to help you in the process.


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