How is tax liability defined?

Tax liability is defined as the total amount of tax that an individual or business owes to the government based on their taxable income and applicable tax laws. This amount reflects the taxes assessed on a taxpayer's income, investments, or other taxable activities. It forms the basis of what an individual or entity is required to pay to fulfill their obligations under the tax code.

This definition is crucial because understanding one’s tax liability helps in financial planning, ensuring compliance with tax laws, and avoiding penalties or interest from underpayment. In practical terms, tax liability is determined after calculating the total income, applying the relevant deductions and credits, and then applying the tax rates to arrive at a final amount owed.

The other responses do not encapsulate this definition correctly. For instance, the total tax rate applied to income does not account for the nuances of deductions or credits, merely providing a rate without the actual owed amount. The expected tax refund amount is the potential return based on overpayments but does not indicate the liability itself. Lastly, the total deductions available to a taxpayer might reduce the liability but are not the liability in themselves. The key aspect of tax liability is its focus on the total amount owed, making option B the correct choice.