Personal Finance: Chapter 2 review

This money is required by law to be withheld from your paycheck and is managed by the IRS (Internal Revenue Service).

• Personal Excemptions

• Social Security

• Federal Income Tax

• Group Health Insurance

True or False: Personal Exemptions/Withholdings help you pay less taxes.

• True

• False

When computing graduated income tax, the word "over" is your signal to:

• Add to taxable income and multiply the tax rate

• Subtract from taxable income and multiply the tax rate

• Multiply the taxable income and multiply the tax rate

• Divide the taxable income and multiply the tax rate

The Federal Insurance Contributions Act (FICA) requires employers to deduct a percentage of your income for:

• Social Security

• Medicare

• Both Social Security and Medicare

• Neither Social Security and Medicare

Group insurance:

• Costs less than individual insurance

• the same cost than individual insurance

• a much higher cost than individual insurance

• depending on what type of insurance you choose, is high or lower than individual insurance.

True or False: Individual insurance for a single person can cost anywhere between $400 - $600 dollars.

• True

• False

Which will always be higher? Net pay or Gross pay.

• Net pay

• Gross pay

This is the amount of money you have left after all tax withholdings and personal deductions have been subtracted from your check.

• Gross Pay

• Disgusting Pay

• Net Pay

• Total Deductions

True or False: Net pay = Gross pay - Total Deductions

• True

• False

When using the following calculation for graduated income tax, what are you finding? Annual Gross Pay - Personal Exemptions = THIS

• Taxable wages

• Federal Income Tax

• Social Security

• Medicare