How to record DTA for long-term disability reserve
Records the deferred tax asset for self-insured long-term disability reserves that are not deductible for tax purposes until benefits are paid.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Deferred Tax Asset | Asset | 8,500.00 | - |
| Deferred Income Tax Benefit | Revenue | - | 8,500.00 |
💡 Accountant's Note
Companies often accrue a liability for estimated future disability payments. Since tax deductions generally require 'economic performance' (payment to the individual), a temporary difference arises.
Practitioner & Systems Framework
💻 ERP Architecture
Ensure HR benefit reserves are flagged as temporary differences in the year-end tax provision process.
⚠️ Audit Flags
Actuarial adjustments to the reserve that do not have a corresponding tax impact.
📄 Required Documentation
Actuarial report for the reserve and a schedule of actual payments made during the tax year.
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Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.
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