Hi everyone,
I keep seeing the term tax liability when filing taxes and reading financial articles. I understand it has something to do with the amount of tax you owe, but I’m not fully clear on how it’s calculated or what factors affect it.
The sum of tax that you are liable to pay to the government during a year is known as your tax liability. It is computed based on your taxable earnings after subtraction and credit deductions. In a nutshell, it is the amount you are required to pay in tax, not what you paid already or did not pay and you pay it when you are filing.
Tax liability is the total amount of money you legally owe to the government in taxes. It includes income, property, sales, and other taxes due based on your earnings and activities.
Tax liability is the total amount of money that an individual, business, or other entity is legally obligated to pay to a federal, state, or local government taxing authority.
