Tax Liability

Tax liability

The amount in taxes a taxpayer to the government.

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Tax Liability

The money one owes to the government in a given year. At its most basic, a tax liability is usually a certain percentage of one's income, and varies according to income. That is, one who makes $100,000 per year usually has a higher tax liability than one who makes $25,000. Different taxable events command different tax liabilities. For example, income taxes are usually higher than capital gains taxes. Certain taxable events do not occur for everyone in every year; for example, inheritance taxes only apply when someone dies. See also: Tax bracket.

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Tax Liability

The amount of total tax due the IRS after any credits and before taking into account any advance payments (withholding, estimated payments, etc.) made by the taxpayer.