Financial Literacy- Paying Taxes

What's commonly referred to as the most important tax day of the year?

• April 15

• August 15

• December 31

• June 30

Which of the following statements is NOT true?

• Different states have different income and sales tax rates

• Federal income taxes are used to pay for the military

• Income from your salary and the dividends you earn are always taxed at the same rate

• Local property taxes can be used to pay for schools

The Social Security program:

• Is only for people under the age of 18

• Pays for benefits for retired workers and their dependents, as well as workers who are disabled and their dependents.

• Pays for medical benefits for certain people when they reach age 65.

The IRS considers unearned income to be:

• Money that you owe for taxes each year.

• Income from interest and dividends

• Income from your salary, wages, and tips

• Any money that you receive

What does IRS stand for?

• Investment Returns Service

• Interest Rate State

• Income and Rent Standard

• Internal Revenue Service

Payroll taxes are made up of:

• Social Security taxes and Medicare taxes

• Federal income taxes and state income taxes

• Retirement contributions and insurance payments

• Gross pay and net pay

The Medicare program:

• Pays for medical benefits for certain people when they reach age 65

• Is only for people under the age of 24

• Pays for benefits for retired workers and their dependents as well as workers who are disabled and their dependents

• Is not a major expense of the federal government

What is the Internal Revenue Service (IRS)?

• The state committee that enacts alws for each state income tax system

• The federal agency that collects income taxes in the United States

• A company that people can hire to complete a tax return for them

• The federal committee that creates the annual United States government

The IRS considers earned income to be:

• Only the income you get back as a tax refund

• All income received during the year

• Income from your salary, wages, and tips

• Income from interest and dividends

The Social Security tax rate is generally

• 6.2% of gross pay for everyone (up to a certain dollar amount)

• 1.45% of gross pay for everyone

• Differs from person to person

• The same as a person's Medicare tax rate