Accounting question

[Michael DeBusk]

On Jun 27, 2016 06:40, "Guus Bonnema" <gbonnema at xs4all.nl> wrote:

> Just trying to understand. If I get a gross amount of 1200 euro salary
for a certain month, pay 200 income tax then I earn a 1000 income: right?

No, sir. You earn 1200 euro income. The fact that you never actually get to
hold all 1200 of them in your hands before paying 200 of them to the taxing
authorities doesn't change that.

> Why would the tax return not be delayed income?

Because the income was not delayed; the receiving of it was.

Taxes are expenses, just like gas and electricity and mortgage interest.
There is nothing special about them from an accounting perspective. People
so often think of them as something unusual because very few people
ACTUALLY PAY THEM, i.e., get their full pay and write a check to the tax
man every week. Most people have jobs, and their employer withholds
estimated tax from the paychecks and does the actual check-writing.

It's the entrepreneurs among us who understand what it actually FEELS like
to pay taxes. I've never heard a small business owner brag about "sticking
it to the government" by getting a large refund check. Imagine paying an
extra hundred euro a month on your telephone bill and then claiming you
"put one over on" the phone company when they sent you your 1200 back at
the end of the year.

But I digress.