FL Final Exam: Taxes & Income

Match the following terms with their definitions:

• Social Security

• A personal investment account specifically set up to provide income during retirement.

• Retirement account

• Payment for work expressed as a fixed annual figure.

• Salary

• An employee withholding certificate that lets your employer know how much federal income tax to withhold from your pay.

• Federal income tax

• Social insurance program operated by the U.S. government that provides income for individuals whose earnings are reduced or stopped because of retirement, disability, or death.

• W-4

• Taxes on income collected by the U.S. government.

What is the federal minimum wage? What is the minimum wage in Massachusetts?

• Federal minimum wage is $7.25 per hour; Massachusetts minimum wage is $13.50 per hour.

• Federal minimum wage is $10.00 per hour; Massachusetts minimum wage is $15.00 per hour.

• Federal minimum wage is $7.25 per hour; Massachusetts minimum wage is $15.00 per hour.

• Federal minimum wage is $8.00 per hour; Massachusetts minimum wage is $14.00 per hour.

How many hours must a person work per week before he or she can earn overtime wages?

Fill in the blank: The standard overtime hourly wage is _______ times the hourly rate.

• 1.5

• 2.0

• 1.25

• 1.75

Federal, state, and local income taxes are deducted from a person’s paycheck because:

• they are voluntary contributions to the government.

• they are required by law to fund government services and infrastructure.

• they are optional deductions for personal savings.

• they are used to pay off personal debts.

What percentage is deducted from a person’s paycheck for Social Security? For Medicare?

• 6.2% for Social Security and 1.45% for Medicare

• 5% for Social Security and 2% for Medicare

• 7% for Social Security and 1% for Medicare

• 6% for Social Security and 1.5% for Medicare

Name a couple advantages and disadvantages to being a salaried employee.

• Salaried employees have a fixed income and job security, but may work overtime without extra pay.

• Salaried employees have flexible hours and receive overtime pay for extra hours worked.

• Salaried employees have no job security and must clock in and out daily.

• Salaried employees are paid by the hour and have no benefits.

Name 4 instances when an employee gets paid without working.

Name 4 different employee benefits.

• Health insurance, Retirement plans, Paid time off, Employee discounts

• Health insurance, Gym membership, Company car, Free meals

• Retirement plans, Paid time off, Stock options, Travel allowance

• Employee discounts, Health insurance, Paid time off, Childcare support

The two taxes known as FICA (Federal Insurance Contributions Act) taxes are:

• Social Security and Medicare taxes

• Income and Property taxes

• Sales and Excise taxes

• Corporate and Capital Gains taxes