Introduction to Taxes

Introduction to Taxes

By Cyndy Harrison

If you were in charge of how tax dollars are spent, what are some things in your community, state, or nationally that you would choose to pay for?

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​What do you think?

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Open Ended

After reading the article, "Where Did My Paycheck Go? Understanding Taxes and Government Spending, briefly describe the purpose of taxes?

Multiple Choice

According to the same article, Medicare and Social Security are mandatory spending categories funded by which type of taxes that are withheld from your paycheck?

• FICA (payroll taxes)

• local

• state

• federal

Multiple Choice

The federal income taxes that are withheld from your paycheck are used to pay for what?

• Mandatory spending

• Discretionary spending

• Unemployment insurance

• Medicare and Social Security

Multiple Choice

All of the following options are benefits we receive as a result of government spending EXCEPT...

• Health and retirement benefits for seniors

• credit card debt forgiveness

• national park maintenance

• public school education

Multiple Choice

What is the difference between gross pay and net pay?

• Gross pay is the amount after taxes; net pay is before taxes.
• Gross pay includes bonuses; net pay does not include bonuses.
• Gross pay is the same as net pay; there is no difference.
• Gross pay is the total earnings before deductions; net pay is what remains after deductions.

Multiple Choice

What are pre-tax deductions and contributions?

• Pre-tax deductions are amounts added to gross income after taxes.
• Pre-tax deductions and contributions are amounts deducted from gross income before taxes, reducing taxable income.
• Contributions are only made from net income after taxes are deducted.
• Pre-tax deductions increase taxable income for the year.

Multiple Choice

What are two examples of Employer Contributions?

• Health insurance and 401(K)

• Stock options granted to employees
• Paid time off accruals
• Federal and state taxes

Multiple Choice

About how frequently does Hope receive a paycheck?

• Daily

• Weekly

• Every two weeks

• Monthly

​How to Read a Pay Stub

Watch the video, "How to Read a Pay Stub" on the next slide, then and then answer the questions.

Multiple Choice

Assuming that Hope receives a paycheck at regular intervals similar to the stub shown, how many pay periods has Hope had year-to-date (YTD)?

• 2

• 3

• 8

• 9

Multiple Choice

Which statement below accurately describes Hope’s gross wages?

• Gross wages are calculated by multiplying Hope’s hourly rate by the number of hours she worked

• Gross wages are Hope’s fixed salary, which she receives for every pay period

• Gross wages are calculated by subtracting all of Hope’s deductions from her gross income

• Gross wages are how much Hope has earned over the course of the entire year

Multiple Choice

What was the largest deduction for this pay period?

• FICA Medicare Tax

• FICA Social Security Tax

• Federal Tax

• NC State Tax

Multiple Choice

Look at the lines that say HEALTH, DENTAL, and RETIREMENT. Which statement below is accurate?

• Those lines represent taxes that Hope paid to the Federal government

• Those lines represent taxes that Hope paid to the state government

• Those lines represent benefits that the employer is paying to Hope in addition to her wages

• Those lines represent insurance and retirement plans that Hope funds directly from her paycheck

Multiple Choice

Hope's contribution to her RETIREMENT plan...

• is a post-tax contribution on which she pays federal income taxes

• is pre-tax and therefore not included in federal income taxes

• Is a contribution to her Social Security

• is taxed at a rate of 15%

Multiple Choice

What was the TOTAL amount deducted from Hope's latest paycheck?

• $90.00

• $284.79

• $315.21

• $600.00

Multiple Choice

One of Hope’s coworkers quits, and during the next pay period Hope works 60 hours instead of 40 to help cover the shifts. Which of Hope’s deductions will definitely change as a result?

• Her Federal tax

• Her health

• Her dental

• Her retirement

Multiple Choice

Which of the following statements is TRUE?

• Hope has had more deductions this year than take home pay

• Hope has had more take home pay this year than deductions

• Hope has had equal amounts of take home pay and deductions this year

• Hope’s paystub only shows deductions and take home pay for this pay period, not the entire year to date

Multiple Choice

Hope's employer deposits her paycheck directly into her checking account. How much would her employer have deposited into Hope's checking account on the most recent payday of 5/21/20?

• $40.00

• $284.79

• $315.21

• $600.00

You have completed the Introduction to Taxes! Next lesson is "How to File Your Taxes."

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​Way to go!