Study Guide Taxes Test 2

1. What does the term "withholding" mean in reference to your paycheck?

• The amount of your paycheck that you are NOT being taxed on
• How much you are going to owe the government when you file your annual tax return
• How much you earn and includes salary, bonus and commissions
• How much is being taken out of your paycheck for things like taxes, employer sponsored health insurance, and retirement

2. When do you start paying income taxes?

• When you turn 18
• When you get a full-time job (part-time does not count)
• When you make more than the minimum income requirement
• When you are notified by the IRS that you are required to pay federal income taxes

3. Why is it important to be extremely careful when completing your 1040 form?

• Making a mistake will disqualify you from receiving future refunds
• The 1040 form determines whether you owe additional taxes or are entitled to receive a refund from the government
• Completing the 1040 incorrectly will mean the wrong amount of taxes will be withheld from your paychecks going forward
• Mistakes on your 1040 form make you ineligible for employment during the next year

4. You are starting your first job and you are asked to complete some paperwork on your first day. Which form will determine how much money is withheld from your paycheck for taxes?

• W-4
• W-2
• I-9
• 1040

5. Which statement correctly describes taxable income?

• Taxable income is the sum of all income a person earns
• Taxable income is always equal to or greater than a person's gross income
• Taxable income is gross income minus deductions and exemptions
• Taxable income includes all personal expenses and investments

6. When determining whether you NEED to file a federal tax return, each of these questions matters EXCEPT…

• How much income did you earn this year?
• What type of income did you earn this year?
• What state do you live in?
• Are you claimed as a dependent on anyone else's tax return?

7. Elaine just accepted a new job and is working with the company’s HR department to fill out paperwork. Which of the following steps is she responsible for?

• Determine how much tax to withhold from her paychecks based on W-4 information
• Complete a W-4 form
• Send withholding amounts to the federal government
• Complete a W-2 form

8. Which of the following statements about this W-2 form is true?

• Avia Consulting will use this W-2 to file their 1040 form
• James earned about $117,000 over the year based on the total of her Wages, Social Security wages, and Medicare wages
• James paid state income taxes of $1,189.90
• James works in the same city that Avia Consulting is based in

Tags

CCSS.6.SP.B.5A

9. When you complete your 1040 form, if you overpaid your taxes and the government owes you money, that is called a __________.

• withholding
• direct deposit
• deduction
• refund

10. Your friend Laila is talking to you about the benefits of tax filing websites. Which of the following is true?

• Filing your taxes using a website is always free of charge
• You are guaranteed a higher refund than if you were to use a paper form or hire a professional
• If you owe money to the IRS, you receive a discount if you e-file use a tax filing website
• You can avoid the costs of having to pay a professional, though you may have to pay for e-filing online