Personal Financial Literacy Final Exam Review

Which of the following are the three largest categories of federal government spending?

• Infrastructure, Defense, and Science
• Health, Military, and Interest on Debt
• Veterans, Infrastructure, and Education
• Education, Defense, and Food/Agriculture

What does the term "withholding" mean in reference to your paycheck?

• It is the amount of your paycheck that you are NOT being taxed on.
• It is how much is being taken out of your paycheck in taxes.
• It is how much you are going to owe the government when you file your annual tax return.
• It is how much you earn and includes salary, bonus and commissions.

When do you start paying taxes?

• When you turn 18
• When you make more than the minimum income requirement
• When you get a full-time job (part-time does not count)
• When you are notified by the IRS that you are required to pay federal income taxes

Why is it important to be extremely careful when completing your 1040 form?

• Making even one mistake on your federal taxes can result in your being convicted of a crime
• The 1040 form determines whether you owe additional taxes or are entitled to receive a refund from the government
• Completing the 1040 incorrectly will mean the wrong amount of taxes will be withheld from your paychecks going forward
• Mistakes on your 1040 form make you ineligible for employment during the next year

Which of the statements below is TRUE about filing your taxes, assuming your only income comes from the salary you earn at BigTech Company?

• You need to file your tax return by the end of the calendar year (typically December 31st)
• If your employer takes out federal income taxes through payroll withholdings, you do not need to file a tax return
• You must file your tax return by April 15th of the following year or request an extension by that date
• You do not need to pay any income taxes until April 15th, so you should ask your company to wait until after that date to withhold any money

You are starting your first job and you are asked to complete some paperwork on your first day. Which form will determine how much money is withheld from your paycheck for federal and state income taxes?

• W-2
• W-4
• I-9
• 1040

Which of the following paycheck withholdings puts money into a retirement investment fund that you will manage?

• Social Security
• Medicare
• 401(k) contribution
• Federal income taxes

When determining whether you NEED to file a federal tax return, each of these questions matters EXCEPT…

• How much income did you earn this year?
• What type of income did you earn this year?
• What state do you live in?
• Are you claimed as a dependent on anyone else's tax return?

You are at the checkout counter at the local supermarket and use your debit card to pay for your groceries. Where does the money for this purchase come from?

• Your credit card company covers the cost
• It is deducted directly from your checking account
• Your credit card company provides you with a cash advance to cover the cost
• It is deducted from your credit card account

Jocelyn gets a text alert from the bank that her account balance has dropped below $100 after a series of $20 ATM withdrawals. She has not used her ATM in over a week and wonders what she should do. What would you recommend?

• Wait until your monthly statement arrives so you can check to see if those withdrawals are still there
• Wait a week as it is fairly common for the bank to catch mistakes like this
• Check your wallet to be sure your debit card has not been stolen. If you still have it, then you should not worry.
• Contact your bank immediately as it appears that your account may have been hacked