Taxes -- EPF Unit 2 Review

Why is it necessary to have a W-2 or 1099 form when preparing your tax return?

• They include passwords for tax preparation software.

• They report income which needs to be used to file taxes.

• They show how much you have donated to charities.

• They highlight job performance which can reduce your tax rate.

Why might preparing taxes be different for people living in different states?

• Everyone must file state taxes but depending on where you live, you may not need to file federal taxes.

• States have the same tax laws meaning there are no differences between any of the states.

• State taxes are due January 1st but federal taxes are due April 15th.

• Everyone must file federal taxes, but each state has different tax laws.

The W-4 tax form is used to ___________.

• File your tax return

• Indicate how much federal income tax to withhold

• Determine how much your gross pay should be.

• Avoid paying income taxes on your paychecks

Why is it useful to have your bank account and routing numbers when using tax preparation software?

• To show how much interest you have earned over the year.

• To indicate where tax refunds should be sent.

• To use as additional forms of identification.

• To determine how much money you have paid in taxes.

Which of the following statements is true about taxes?

• Taxes pay for schools, first responders, and roads.

• Taxes are only collected by the federal government.

• Taxes pay toll road fees and office buildings

• Taxes are only collected by state governments.

Each year, you must file ____________________.

• Only your state taxes since federal taxes are filed every four years

• Only your federal taxes since state taxes get filed every other year.

• Your federal, state, county, and town taxes.

• Your federal taxes and state taxes if your state requires it.

When preparing your taxes, what can possibly help reduce the amount of taxes that you owe?

• Having stock dividends.

• Providing your earnings on a W-2 or 1099 form.

• Having credits and deductions.

• Providing stock and savings interest.

To file your federal and state taxes you ____________

• Can use tax preparation software for federal taxes, but not for state taxes.

• Must prepare different forms for state and federal taxes, when required.

• Can use tax preparation software for state taxes, but not for federal taxes.

• Must prepare the same tax forms for state and federal taxes.

Your employer sends you a _______ form that tells you how much you've made and how much you've paid in taxes in the last year.

• W-4

• W-9

• W-2

• 1040

What is the difference between gross and net pay?

• Gross pay is before taxes are subtracted but net pay is after taxes are taken out.

• Net pay is withheld for state taxes and gross pay is withheld for federal taxes.

• Net pay indicates total salary and gross pay shows hourly rate on paycheck.

• Gross pay is after taxes are subtracted but net pay is before taxes are taken out.