ACC 1 Introduction to Taxes

Which tax provides for medical benefits?

• FICA tax

• Federal Income Tax

• Social Security Tax

• Medicare Tax

How much income tax do employers withhold from employee pay?

• 6.2% of gross pay

• 1.45% of gross pay

• 7.65% of gross pay

• Employers use the information on Form W-4 to compute income tax withholding.

Net pay:

• is more than gross pay.

• is also known as take-home pay.

• is gross pay minus 7.65%.

• depends on how much the employee wants to pay in Social Security taxes.

The Social Security tax rate is:

• 1.45% of gross pay

• 6.2% of gross pay

• 7.65% of gross pay

• 6.25% of gross pay

Employees send their payroll taxes directly to the federal government.

• True

• False

Employers use which form to compute the amount of federal income tax to withhold?

• Form W-4

• Form W-2

• Form 1040EZ

• Form 1040

Gross pay is the amount of pay the employee takes home.

• True

• False

Who completes Form W-4?

• Employer

• Employee

• IRS

• Your Parent

Employees decide when to pay their payroll taxes.

• True

• False

Federal income taxes are used to pay the interest on the national debt.

• True

• False