PF: Chapter 10 Lesson 3 Income Tax Basics

What are the three different types of income?

• Wages, salaries, and tips

• Ordinary income, capital gains, and dividends

• Earned income, passive income, and portfolio income

• Gross income, adjusted gross income, and taxable income

How are income taxes deducted from an employee's paycheck?

• The employee has to manually calculate and deduct the tax amount from their paycheck

• The government automatically deducts a fixed percentage from the employee's paycheck

• The employer calculates the tax amount based on the employee's personal tax situation

• The employee calculates the tax amount based on their income and pays it to the employer

What determines the amount of tax withheld from a paycheck?

• Form W-2

• Form 1040

• Form 1099

• Form W-4

How does the government determine the tax rate for an individual?

• By calculating a fixed percentage of the individual's income

• By randomly assigning a tax rate

• By dividing the individual's income into tax brackets and applying different rates to each bracket

• By considering the individual's personal tax situation

What is the deadline for filing a tax return for the previous calendar year?

• April 15

• December 31

• May 1

• March 31

What happens if you don't file your tax return on time?

• You will be exempt from paying taxes for that year

• You will be audited by the IRS

• You will be charged a failure-to-file penalty

• You will receive a warning letter from the IRS

What is the penalty for filing taxes more than 60 days late?

• A minimum of $435

• A minimum of $200

• A minimum of $100

• A minimum of $500

What is the average tax refund in 2019?

• $1,000

• $2,000

• $3,000

• $4,000

What does it mean if you receive a big tax refund?

• You have overpaid your taxes throughout the year

• You have not paid any taxes throughout the year

• You have underpaid your taxes throughout the year

• You have correctly paid your taxes throughout the year

What is the best refund check you can get?

• $0

• $100

• $500

• $1,000