This is a quick overview of Toxic backlinks:
In general, a Toxic back link is any link that intends to manipulate the PageRank, or the search engine results.
It can be a link to your site or an outgoing link from your site, it will be considered a toxic if Google decides it wasn’t natural and is seen as an artificial attempt to boost rankings. Toxic links are also called “unnatural links” and can be considered a violation of the Google Guidelines.
Also, creating links that weren’t editorially placed or vouched for by the site’s owner on a page, would also be called Toxic links.
How do Toxic links affect my page rank?
If Google finds toxic links linking to you website it may algorithmically apply a penalty to your page.
Google’s main concern is to keep users away from bad search experience and to provide them with the most relevant results.
Backlinks are considered very important at Google. If Google finds out that a link is not adding any value to your website and it has been put there in an attempt to enhance you page rank or simply send traffic to your website, Google will consider it an unnatural (toxic) backlink.
When the number of unnatural/toxic backlinks exceed the number of good/high quality backlinks pointing to your website it creates an imbalance in your backlink profile at Google.
Google can impose a Manual or an Algorithm penalty on your website based on the website's ratio of quality links to toxic links.
What can I do about Toxic Backlinks?:
If you find you have Toxic links. Log in to your Google webmaster page. From there you can “Disavow” links. Disavowing a link means you are confirming to Google that this is a toxic link and not authorised by you/shouldn’t be used for your SEO score.
Google provides instructions about how to create a disavow file which is text file in which you show Google which URLs contain Toxic links.
As this is just a general overview on toxic links and only meant as an introduction, I won’t go into the subject of disavowing links. When you are ready, just search for "how to disavow links" to clean out toxic links and recover any lost page rank/traffic you received as a result of a Google algorithm update.