Payroll and Tax Quiz

FICA taxes include:

• social security tax

• withholding allowances

• local tax

• commission

Line 5 on Form W-4 describes "total number of allowances" as:

• allowance

• payroll taxes

• withholding allowances

• net pay

Which is an example of a required employer deduction?

• healthcare

• life insurance

• retirement plans

• social security

The amount of money that tax calculations are based on is called:

• social security income

• liability income

• taxable income

• itemized deductions

Which form is used for a corporation filing taxes?

• form w-4

• form 1120

• form 1040A

• form 1040

Define the term 'tax credit'.

• A deduction from the total amount a taxpayer owes to the state

• A direct reduction in tax liability, not dependent on the taxpayer's tax rate

• An indirect method of reducing taxes through various exemptions

• A governmental incentive designed to encourage economic growth

Define the term 'pay stub'.

• A document an employee receives listing payment details

• A type of tax form

• A digital payment method

• A financial planning tool

Define the term 'income tax'.

• A tax on individual earnings from various sources

• A monthly payment to the government

• A yearly subscription for government services

• A one-time fee for citizenship

Define the term 'net pay'.

• The total amount of money earned by an employee before any deductions.

• The amount of money an employee takes home after all deductions.

• The total amount of an employee's earnings allocated for retirement plans.

• The amount of money an employee earns in overtime.

For a taxpayer using Form 1040-EZ, to determine if an individual has earned a refund or owes taxes, one must:

• Check the total tax payments and compare it with the total tax liability

• Submit the form and wait for the IRS to notify

• Consult a tax professional

• Look for a refund status section on Form 1040-EZ