Taxes

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What is a tax refund?

Back

A tax refund is money returned to a taxpayer when they have overpaid their taxes throughout the year.

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What is a standard deduction?

Back

A standard deduction is a fixed dollar amount that reduces the income on which you are taxed, available to all taxpayers.

Front

What is the purpose of a 401k?

Back

A 401k is a retirement savings plan that allows employees to save a portion of their paycheck before taxes are taken out.

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What is federal income tax?

Back

Federal income tax is a tax levied by the IRS on the annual earnings of individuals, corporations, and other legal entities.

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How do you calculate taxable income?

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Taxable income is calculated by taking your total income and subtracting any deductions or exemptions.

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What is the Social Security tax rate?

Back

The Social Security tax rate is 6.2% on earnings up to a certain limit, which is adjusted annually.

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What is the Medicare tax rate?

Back

The Medicare tax rate is 1.45% on all earnings, with no upper limit.

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What does it mean to owe taxes?

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Owing taxes means that a taxpayer has not paid enough tax throughout the year and must pay the remaining amount to the IRS.

Front

What is a bonus in terms of income?

Back

A bonus is additional compensation given to an employee, often based on performance, which is subject to income tax.

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What is the significance of withholding taxes?

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Withholding taxes are amounts taken from an employee's paycheck to cover their estimated tax liability for the year.