FA Semester 1 Final Study Guide

Which of the following is NOT typically a payroll deduction?

• Federal income taxes

• FICA

• Health insurance plan

• Office supplies and equipment

Kiki receives a paycheck for 15 hours of work at a rate of $20 per hour. Her paystub lists 401(k) withholdings of $40, FICA of $20, federal income taxes of $26, and a healthcare payment of $8. What is Kiki’s net pay?

• $206

• $254

• $300

• $394

Which expenditures make up the greatest share of state spending?

• Transportation and corrections

• Education and health care

• Low-income assistance and pensions

• Environmental programs and parks

Lamar made $92,000 as a data analyst his first year out of college. He calculated his above-the-line deductions to be $5,500, his itemized deductions to be $7,000, and the standard deduction is $12,950. What deductions is Lamar allowed to take that will minimize his taxes owed?

• He can take the $5,500 and the $12,950 for $18,450 in deductions

• He can take the $7,000 and the $12,950 for $19,950 in deductions

• He can take all three for $25,450 in deductions

• He can take the $5,500 and the $7,000 for $12,500 in deductions

Maricela calculated that she owes $2,493 in federal taxes after all deductions and credits. Her W-2 states that $2,670 was withheld in federal tax. This means that Maricela:

• Will receive a refund of $177

• Has to pay $177 in taxes owed

• Will pay $177 less in taxes next year since she overpaid this year

• Should speak to her employer to get the $177 in extra taxes that they withheld

Who should consider completing a W-4 form?

• Bruno, who just adopted a baby and wants to adjust his tax withholdings

• Aaliyah, who wants to enroll in her company’s 401(k) program for the first time

• Carter, who is considering a career change and wants to update his resume

• Denise, who doesn’t like her company’s health insurance plan options

Which of the following is true about state taxes?

• The largest state programs funded by state taxes are education and healthcare

• States can levy property taxes and sales taxes, but not income taxes

• The federal government determines state tax rates

• Sales tax rates are the same in all states, but income tax rates are different

Payroll taxes are different from income taxes in all of the following ways, EXCEPT:

• Payroll taxes are based on your wages and salary, while income taxes are based on all your forms of income

• Payroll taxes fund the Social Security and Medicare programs, while income taxes fund government programs more broadly

• Payroll taxes are regressive, while income taxes are progressive

• Payroll tax rates scale upward with income, while income taxes are a flat rate across all earning levels

The graph shows a hypothetical tax rate as a function of income. Which of the following statements about the graph is true?

• The tax is proportional

• The tax is regressive

• The tax collects the same dollar amount from all earners

• The tax is progressive

Which of the following is NOT a reason you might receive a 1099 statement?

• Working as an independent contractor

• Working as a full-time employee for a business

• Receiving unemployment benefits

• Earning interest or dividends on investments