Understanding Taxes And Your Paycheck

What are taxes?

• A) A voluntary contribution to the government

• B) Required payments of money to governments for public goods and services

• C) A one-time fee for citizenship

• D) Payments for personal debts

Which of the following is NOT a common type of tax?

• A) Income tax

• B) Payroll tax

• C) Sales tax

• D) Entertainment tax

What can a tax deduction do to your taxes?

• A) Increase the amount of tax you owe

• B) Have no effect on your taxes

• C) Reduce the amount of tax

• D) Eliminate the need to pay taxes

How can a tax credit affect a taxpayer's situation?

• A) It always increases the amount of tax owed

• B) It can either reduce the tax owed or increase the refund

• C) It has no impact on the amount of tax or refund

• D) It is only available to businesses, not individuals

How are income taxes most commonly collected from employees?

• A) Through direct payment to the government at the end of the year

• B) By withholding from their paycheck

• C) Through a one-time payment at the start of employment

• D) Employees are not required to pay income taxes

What does FICA stand for?

• Federal Income Contributions Act

• Federal Insurance Contributions Act

• Financial Insurance Contributions Agency

• Fiscal Insurance Company Act

Who is responsible for paying payroll taxes?

• Only the employer

• Only the employee

• Both the employer and the employee

• Neither the employer nor the employee

What type of tax is a sales tax?

• A tax on income

• A tax on property

• A tax on retail products based on a set percentage of the retail price

• A tax on services

What are federal taxes used to pay for?

• National defense, health care for the poor, unemployment compensation, and other national expenses.

• Police services, road and bridge construction, and public-school districts.

• Fire protection, road and bridge construction, and primary source of funds for public schools.

• Sales taxes and property taxes on items like cars and boats.

Which programs are among the largest that the federal government supports with payroll taxes?

• Social Security and Medicare

• Police and fire protection services

• Public-school districts

• Road and bridge construction