Taxes: End of Unit Quiz

If you sell an investment for a profit, what type of tax will you have to pay on that profit?

• Federal income tax

• Property tax

• Sales tax

• Capital gains tax

The teachers at a local public school are most likely being paid for in part by which of these taxes?

• Property tax

• Water tax

• Election tax

• Payroll tax

Which is true about federal and state taxes?

• Federal and state income taxes are the same for individuals in all states

• Individuals only have to pay state or federal income taxes, not both

• Federal taxes are progressive, increasing as income increases; state taxes vary by state

• Both federal and state income taxes are progressive, increasing as income increases

Sales tax:

• Varies based on location

• Is set at the federal level

• Never applies to food

• Affects all goods equally

What is true about gross wages and net wages?

• Gross wages are your take-home pay. Net wages are a form of payroll tax.

• Gross wages are the amount of money earned before taxes or deductions are taken out. Net wages are the amount you keep after taxes and deductions are taken out.

• Gross wages are the amount you keep after taxes and deductions are taken out. Net wages are the amount of money earned before taxes or deductions are taken out.

• Gross wages are what remain after your wages have been garnished. Net wages are only used for benefits like insurance.

What is the difference between an IRS Form W-2 and IRS Form 1099?

• A W-2 form must be completed by an employee whereas a 1099 is filled out by the IRS and sent to individuals

• A W-2 form is for employees who have taxes withheld by an employer, a 1099 is for self-employed, contractor, or freelance workers

• A W-2 is a form that employees fill out when they are hired whereas a 1099 form is sent to employees to file taxes that shows taxes withheld

• A W-2 is a form required for filing taxes, a 1099 form is a duplicate copy of a W-2 for the employee's records

Which of the following would be considered earned income?

• Pension income

• Money received as a gift

• A bonus from employer

• Dividends from a stock you own

What is true about capital gains tax rates?

• They are higher when selling a personal residence

• They vary depending on how long a person has held their investment

• They are equal to or higher than income tax rates

• They are the same for all investors

What is true about a W-4?

• It can only be filled out once, before an employee's start date

• If an employee doesn't turn in a W-4, the employer is required to fire them

• It is filled out by an employee to indicate their tax situation to the employer

• It is a simplified version of the W-2

Tax credits:

• Are a form of pre-paid taxes

• Are always non-refundable

• May only be claimed by single tax filers

• Reduce the taxes owed by a taxpayer