Unit 5 Review: TAXES

Multiple Choice

This tax form is received when you start a new job. It determines how much money gets taken out of each paycheck.

• W-4

• W-2

• 1099

• 1040

Multiple Choice

How do tax deductions and credits aid in tax optimization?

• By increasing taxable income

• By reducing taxable income

• By eliminating taxes

• By simplifying tax forms

Multiple Choice

How is income tax calculated?

• By multiplying your total income by a fixed percentage.

• By subtracting deductions from your gross pay.

• By applying a tax rate based on your income bracket to your taxable income.

• By adding a standard tax rate to all of your purchases throughout the year.

Multiple Choice

What is the purpose of determining your filing status?

• To calculate tax liability

• To determine eligibility for credits

• To decide on deductions

• To assess income level

Multiple Choice

Identify the filing status that is typically used by a single individual who provides more than half the cost of maintaining a home for a qualifying person.

• Single

• Head of Household

• Married Filing Jointly

• Qualifying Widow(er)

Multiple Choice

Which of the following is not a required deduction?

• Federal Income Tax
• Savings Deposits
• State tax
• Social security Tax

Multiple Choice

What is the deadline for filing Form 1040 for most taxpayers?

• April 15

• May 15

• March 15

• July 15

Multiple Choice

What are the main differences between deductions and credits in taxation?

• Deductions reduce taxable income, while credits reduce tax liability

• Deductions are always refundable, while credits are not

• Deductions apply to all taxpayers, while credits are only for specific groups

• Deductions are calculated after credits are applied

Multiple Choice

What is the difference between standard deductions and itemized deductions?

• Standard deductions are fixed amounts, while itemized deductions cover specific expenses.

• Itemized deductions are fixed amounts, while standard deductions cover specific expenses.

• Standard deductions are only for individuals, while itemized deductions are for businesses.

• There is no difference; both are the same.

Multiple Choice

Why is it important to meet tax deadlines?

• To avoid penalties

• To ensure compliance

• To plan financial obligations

• All of the above