CM 2.1B Federal Income Tax (Single)

Front

What is Federal Income Tax?

Back

A tax levied by the federal government on the income of individuals and businesses.

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What does 'net pay' mean?

Back

The amount of money an employee takes home after all deductions, including taxes, have been subtracted from gross pay.

Front

What is 'gross pay'?

Back

The total amount of money earned by an employee before any deductions are made.

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What is the purpose of tax allowances?

Back

Tax allowances reduce the amount of income that is subject to tax, potentially lowering the overall tax liability.

Front

How do you round a number to the nearest whole number?

Back

If the decimal is 0.5 or higher, round up; if it's less than 0.5, round down.

Front

What is the formula to calculate federal income tax withheld?

Back

Federal income tax withheld is typically calculated based on the employee's earnings, filing status, and number of allowances claimed.

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What does it mean to claim an allowance on a tax form?

Back

Claiming an allowance reduces the amount of income tax withheld from an employee's paycheck.

Front

How do you round 459 to the nearest tens place?

Back

460.

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What is the significance of tax brackets?

Back

Tax brackets determine the rate at which income is taxed, with higher income levels being taxed at higher rates.

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What is the difference between 'taxable income' and 'gross income'?

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Taxable income is the portion of income that is subject to tax after deductions and exemptions, while gross income is the total income before any deductions.