Wages and Taxes

Why is taxable income lower than adjusted gross income?

• The standard deduction is deducted from adjusted gross income to calculate taxable income.

• Itemized deductions are added to adjusted gross income to calculate taxable income.

• Taxable income is actually always higher than adjusted gross income.

• Net pay from your last paycheck of the year is deducted from adjusted gross income.

A tax deduction...

• INCREASES a person's tax liability by LOWERING their taxable income

• INCREASES a person's tax liability by INCREASING their taxable income

• Has no impact on the amount of taxes a person pays

• LOWERS a person's tax liability by LOWERING their taxable income

These taxes are calculated at 6.2% and 1.45% of gross earnings

• State Income Tax and FICA Medicare

• Federal Income Tax and State Income Tax

• FICA Social Security and FICA Medicare

• Sales Tax and Estate Tax

Citizens of which of the following countries can be claimed as dependents for tax purposes?

• United States

• Mexico

• Canada

• All answers are correct

Martin's employer withheld $500 in federal income tax for tax year 2024. Martin's tax liability for 2024 is $325. What describes Martin's tax situation for 2024?

• Martin has an overpayment of $175 that will be refunded.

• Martin has a balance due of $175 and he must pay the federal government by April 15th.

• Martin has an overpayment of $825 that will be refunded.

• Martin has a balance due of $825 and he must pay the federal government by April 15th.

Why is it important to review your paystub every pay period?

• Confirm the number of hours worked is correct

• Confirm the pay rate is correct

• Review tax withholding is sufficient

• All of the answers are correct

A paycheck is...

• A paystub

• A check or direct deposit for salary or wages paid to an employee

• A summary of all wages paid during the pay period and year to date

• A timesheet that keeps track of all hours worked during the pay period

Which statement below accurately describes the calculation of gross wages for an hourly employee?

• Annual salary divided by number of pay periods

• Number of hours worked times hourly pay rate

• Net wages times FICA withholding

• Gross income minus taxes and deductions

What is the difference between gross pay and net pay?

• There is no difference between gross pay and net pay

• Net pay is before taxes and deductions are subtracted; Gross pay is your take-home pay

• Gross pay is before taxes and deductions are subtracted; Net pay is your take-home pay

All of the following options are benefits we receive as a result of government spending EXCEPT…

• National Defense

• Public Education

• National Parks Maintenance

• Personal wardrobe