Understanding Income Tax Basics

What information is typically found on a paystub?

• Employee's work phone number

• Employee's social security number

• Employee's earnings and deductions

• Employee's home address

Which form is used by employers to determine the amount of federal income tax to withhold from their employees paychecks?

• W-2

• W-4

• 1040

• 1099

What is the primary purpose of a W-2 form?

• To report the amount of sales tax paid

• To report wages and taxes withheld to the IRS

• To apply for a new job

• To calculate property tax

What is the purpose of the 1040 form?

• To apply for a business license

• To file an annual income tax return

• To register to vote

• To report foreign income

Line 1 on a 1040 asks for total amount, box 1. Which form does one use to find this information?

• W-4

• 1040

• W-2

• Paystub

Where does the majority of federal income tax revenue go?

• Education

• Defense and international security assistance

• Transportation

• Environmental protection

How does the W-4 form affect your paycheck?

• It determines your eligibility for overtime pay

• It specifies the amount of tax to be withheld from your paycheck

• It calculates your annual bonus

• It sets your hourly wage

What is one reason why someone might receive a tax refund after filing their 1040 form?

• They overpaid their estimated taxes throughout the year

• They did not earn any income

• They did not file a W-4 form

• They only worked part-time

Which of the following is one NOT eligible to receive in a tax refund?

• Social Security

• Federal Income Tax

• State Income Tax

• Medicare

What is the main purpose of a paystub?

• To detail earnings and deductions for a pay period

• To provide proof of employment

• To apply for a loan

• To report annual income to the IRS