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liability

lye-uh-BIL-ih-tee /ˌlaɪəˈbɪlɪti/

nounC1GREGMATIELTS

formallegalbusiness

The state of being legally responsible for something, or a financial obligation/debt.

In tax terms, 'tax liability' is the total amount of tax you legally owe to the government before any payments or withholdings are applied.

The story behind the word. Derived from the Latin verb 'ligare', meaning 'to bind.' When you have a liability, you are legally bound or tied to a debt or duty until it is fully discharged.

Word relationships

obligation: Obligation is a general duty, while liability specifically implies legal or financial responsibility for a debt.
debt: Debt is a specific sum of money owed, whereas liability can refer to the state of being responsible as well as the debt itself.

asset: An asset is a useful or valuable quality, person, or thing that brings in value, whereas a liability is a debt or obligation.

Commonly confused with

expense: An expense is money spent to generate revenue or run a life, while a liability is an outstanding obligation or debt that must be paid.

Word family

liable (adjective): Legally responsible for something.

Collocations

tax liability
legal liability
assess liability
limit liability

Example sentences

"He calculated his total tax liability before submitting the form." Financial Planning

Memory hook

If you are liable, you are tied down by a 'line' (li-able) of debt. Liable means legally bound.

When not to use

Do not confuse with 'reliability' (trustworthiness) or use it simply to mean 'disadvantage' in casual speech unless you want to emphasize a burdensome responsibility.

Fun facts

The term 'limited liability' revolutionized modern business, allowing entrepreneurs to risk only what they invested without losing their personal homes or fortunes.