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Author Topic: Tax Calculation and Income Statement Question  (Read 863 times)

BD

  • Former member
Tax Calculation and Income Statement Question
« on: June 24, 2013, 08:05:48 PM »
First, let me say that we should be able to better predict the outcome of the tax event based on the information available to us (i.e. the Income Statement).  Reason:  It can have a LARGE cashflow impact.  Not sure how negative it can get with monthly tax withholding, as I've been on the refund side of the equation.

Part of the issue is that the Income Statement summarizes the figures by period.  Thus, you see the net Income Tax paid, but not the actual paid that may still be due back as a refund.

Question:  How does one reconcile the Tax Calculation Overview message with the Income Tax paid in the week the refund is provided?

I ask because there is a BIG difference between what the message says ($4.5M more) than what shows up on the Income Statement.

I suspect that it might have something to do with the net of the refund less taxes due for the most recent withholding period.  However, since I can see the history graph of the Result line, I cannot make the figures match to the difference that I see (with no withholding going back 3, 4 and 5 weeks - verified from history graph).

Did I just get ripped off?  :o

Offline Infinity

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Re: Tax Calculation and Income Statement Question
« Reply #1 on: June 24, 2013, 08:19:35 PM »
have you taken the loan payments into account? they tend to screw up nicely with taxes.

BD

  • Former member
Re: Tax Calculation and Income Statement Question
« Reply #2 on: June 24, 2013, 09:45:31 PM »
have you taken the loan payments into account? they tend to screw up nicely with taxes.
Thanks.  Interesting idea.

I retained the spreadsheet with the week of the refund and the two prior weeks, plus the Result/Profit for each of the four weeks prior to those (from the history graph), so I can make the calculation.

I added back (assuming the tax withholding does not allow for such deductions from taxable income) the Payments, Fees, and Interest for each of the weeks prior to the refund (essentially the same amount by within a few dollars - easy to estimate).

Result:  Still does not reconcile the actual Refund vs the Tax Reported Refund.  Going back four weeks it is short $1M of the difference, while five weeks back is overshoots the difference by $1M.

Offline Sanabas

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Re: Tax Calculation and Income Statement Question
« Reply #3 on: July 04, 2013, 11:16:21 AM »
First, let me say that we should be able to better predict the outcome of the tax event based on the information available to us (i.e. the Income Statement).

You can work it out to the nearest dollar purely by looking at the income statement. I know I've explained it in detail in the past, but I'm unable to find a post doing so.

If you post a screenie of your income statement, I'll walk through it again.

BD

  • Former member
Re: Tax Calculation and Income Statement Question
« Reply #4 on: July 04, 2013, 12:32:37 PM »
Thanks.  Okay, I'll take you up on the offer.

As mentioned, I only retained the week before, the week of, and the two weeks prior...

Also, from the history graph the Results from the four weeks before the ones on the spreadsheet (most recent first):  -$481,529   $5,391,563   $5,953,688   $3,823,163

EVERY other Tax Message I've received (before and since), matched exactly the amount shown as refunded on the income statement.

Not sure what is different here.
« Last Edit: July 04, 2013, 12:45:10 PM by BD »

Offline Sanabas

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Re: Tax Calculation and Income Statement Question
« Reply #5 on: July 04, 2013, 05:16:51 PM »
You'll need to post a screenie of the monthly totals, as withheld tax is worked out on a month to month basis. If you post just a monthly result for a completed month, then it's easy to work out how much tax will get withheld on the 11th (I think) of the following month so you don't get a nasty surprise.

Also, without showing the dates, I'm just guessing. I assume week C is week 2 of the year, and week D is week 1? So your December deduction was taken out in week 2, then your yearly refund was applied a few days later. Difference between those 2 is 4,783,813, so I assume that was the deduction for December, made on January 11. Tax rate is 30%, so your total profit for December should have between 15,946,040 and 15,946,043. If you go to December, and do total profit + loan payments made + tax deducted, that's the total you should get. Looks about right just eyeballing the numbers you typed in for the previous 3 weeks + week E, there's ~14.7 million profit + ~1.25 mill in loan payments = ~15.95 mill taxable profit.

For any completed month/year, looking at the monthly/yearly income statement, (total profit + loan payments made + tax deducted) x tax rate = tax deducted in the following month.

Quote
EVERY other Tax Message I've received (before and since), matched exactly the amount shown as refunded on the income statement.

Not sure what is different here.

Every other time, you've either made a loss in December, so no tax withheld in January, or the January deduction happened in one week, the yearly refund in the next week.
« Last Edit: July 04, 2013, 05:20:49 PM by Sanabas »

BD

  • Former member
Re: Tax Calculation and Income Statement Question
« Reply #6 on: July 04, 2013, 05:27:47 PM »
Thanks.

Week C = Week 2 - I believe so, as the msg comes out on Jan 15, so whichever week that falls on in 2006.

Don't have monthly totals, but since tax for one month is calculated on profit for the month, I did provide the profit/results by week for the six weeks prior to the tax posting in week C.

Does the tax payment for the prior month typically fall on the second week of the current month?


Offline Sanabas

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Re: Tax Calculation and Income Statement Question
« Reply #7 on: July 04, 2013, 05:39:47 PM »
Thanks.

Week C = Week 2 - I believe so, as the msg comes out on Jan 15, so whichever week that falls on in 2006.

Don't have monthly totals, but since tax for one month is calculated on profit for the month, I did provide the profit/results by week for the six weeks prior to the tax posting in week C.

Yeah, but taxable income is that bottom line profit number + loan payments + tax deducted. And week 1 of December for tax purposes started on the first Monday in December. If you go to your income statement, change it to monthly, then click on the little graph button for tax, loan payment, profit, you may still be able to access the December numbers. Anyway, the numbers seem about right, assuming it's week E + the next 3 weeks making up December, and assuming you made a loss in November.

Quote
Does the tax payment for the prior month typically fall on the second week of the current month?

Always on the 11th, I think. Which may be week 1 or week 2 of the month, depending on which day the month starts. And you receive your refund every Jan 15. You will never get a bill on Jan 15, the worst case is a zero refund, or more likely a refund of a few dollars thanks to the monthly deductions always rounding up.

BD

  • Former member
Re: Tax Calculation and Income Statement Question
« Reply #8 on: July 04, 2013, 05:40:56 PM »
Assuming C = Week 2, taking the sum of the Results from E and the first three of the other Results, multiplying by .3 tax rate, I get $4.4M, pretty close to the "missing amount".  It is $375K short.  

That shortage implies a profit of $1.25M in Nov, which, taking the last of the other weekly Results (a profit of $3.8M), then implies a loss in the three weeks prior to that last Result of -$2.57M.  Seems reasonable.

We'll have to go with that.  Thanks!

Still would like to know when in the current month, prior months taxes are deducted, if you know.  

For some reason I was thinking it was the last week of each month.  But this analysis suggests it is well into the next month.

UPDATE:  Received your answer while posting this one...thanks.


Offline Sanabas

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Re: Tax Calculation and Income Statement Question
« Reply #9 on: July 04, 2013, 05:44:49 PM »
Assuming C = Week 2, taking the sum of the Results from E and the first three of the other Results, multiplying by .3 tax rate, I get $4.4M, pretty close to the "missing amount".  It is $375K short. 

That shortage implies a profit of $1.25M in Nov, which, taking the last of the other weekly Results (a profit of $3.8M), then implies a loss in the three weeks prior to that last Result of -$2.57M.  Seems reasonable.

Actually, the missing 1.25 mill is 4 weeks of loan payments at ~310k each. So an overall loss in November, therefore no tax deducted in December.

Quote
Still would like to know when in the current month, prior months taxes are deducted, if you know.

11th of the month.

BD

  • Former member
Re: Tax Calculation and Income Statement Question
« Reply #10 on: July 04, 2013, 06:57:23 PM »
11th of the month.
Confirmed this moments ago...thanks.

 

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