Meaning & use
tax liability
Last updated
Meanings
nouncountablebusinessfinance
The total amount of tax that a person or company owes to a government.
Grammar: Countable: you can say a tax liability or tax liabilities, and it often follows have, owe, reduce, or pay off.
Patterns
- have a tax liability
- reduce a tax liability
- pay off a tax liability
- a tax liability of + amount
After the audit, the company discovered it had a tax liability of over two million dollars.
She sold some shares to cover her tax liability for the year.
Small businesses often hire an accountant to estimate their tax liability before December.
nouncountable or uncountablelegalfinance
A legal duty to pay tax on a particular amount of income, profit, or property.
Grammar: Used more abstractly for the obligation itself; in this sense it is often uncountable and appears in phrases like arise, accrue, or be subject to.
Patterns
- tax liability arises
- be subject to a tax liability
- create a tax liability
A tax liability arises as soon as the property is transferred to your name.
Gifts to family members can create an unexpected tax liability.
The court ruled that the director was personally subject to the tax liability.
Word forms
| plural | tax liabilities |
|---|
Common combinations
- reduce your tax liability
- Making charitable donations can reduce your tax liability.
- tax liability of + amount
- They face a tax liability of $40,000.
- pay off a tax liability
- He took out a loan to pay off his tax liability.
- accrue a tax liability
- Interest accrues a tax liability each quarter.
- personal tax liability
- The new rules limit your personal tax liability.
Synonyms and how they differ
- tax bill
- More informal and often refers to the document or the amount due at one time; tax liability is the technical term used in accounting and law.
- tax debt
- Used mainly when the amount is overdue and unpaid; a tax liability may still be within its payment deadline.
- tax burden
- Focuses on how heavy the taxes feel overall, not on a specific amount owed by one taxpayer.
Word family
Commonly confused: tax liability or tax return?
tax liability vs tax return
A tax return is the form you send to the tax office; a tax liability is the amount you actually owe.
Practice
After selling her apartment, Maria had a large ______ that she had to pay within thirty days.
Choose one answer.
'Tax liability' is the amount owed, which fits 'had to pay'. A 'tax return' is the form you file, a 'tax refund' is money returned to you, and a 'tax bracket' is a range of income levels.
Make it your own
Write a sentence using “tax liability”, then check it and compare it with the examples above.