Ch. 2-2 Federal Income Taxes

Which term describes the amount of money on which a person must pay taxes?

• withholding

• net income

• taxable income

• pension

Which report must taxpayers file each year to determine if they have paid enough taxes?

• federal income tax report

• federal income tax statement

• federal income tax document

• federal income tax return

If too much withholding tax has been paid, the government pays it back in the form of a refund.

• True

• False

An exemption is an amount of income per person that is free from tax.

• True

• False

Pedro earned gross income of $35,200 last year. If he took the standard deduction of $5,450 and one exemption for $3,500, what was his taxable income for the year?

• $29,750

• $26,250

• $31,700

• none of the above

Peter Williams earned gross income of $76,124 last year. During the year, he made monthly payments of $250 into an approved retirement plan. What was his adjusted gross income last year?

• $73,124

• $75,874

• $74,624

• none of the above