What Is Phantom Tax?

[riya]

Has anyone here personally encountered or dealt with phantom tax? What specific scenarios led to it for you, and more importantly, what strategies did you use (or wish you had used) to manage the resulting cash flow challenges?

 

[robertwilliam]

Phantom tax refers to taxable income reported without corresponding cash receipts.

 

[rajat]

Phantom tax is a tax on income you haven’t actually received in cash, like profits from a business or forgiven debt. You owe taxes on it even though no money was paid to you.

 

[peterkavinsky]

Phantom tax refers to taxes owed on income that a person or business hasn’t actually received in cash. It often occurs with investments like partnerships or REITs, where taxable income is reported but not distributed.

 

[Olivia]

Phantom tax is a tax you have to pay on income you didn’t receive in cash.
For example, if you're part of a business or investment that earns money on paper but doesn’t pay you right away, you might still owe tax on your share.
It feels “phantom” because the income is there for tax purposes, but not in your pocket.