4.6 Pay Stubs and Taxes

What is the primary purpose of a pay stub?

• To provide a summary of an employee's work performance

• To detail an employee's earnings and deductions

• To outline company policies

• To list upcoming holidays

Which of the following is an example of mandatory government spending?

• Education funding

• Social Security

• Infrastructure projects

• Research grants

What is the difference between gross pay and net pay?

• Gross pay is after taxes, net pay is before taxes

• Gross pay includes bonuses, net pay does not

• Gross pay is before deductions, net pay is after deductions

• Gross pay is the same as net pay

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

• W-2

• W-4

• 1040

• 1099

Which of the following is a pre-tax deduction?

• Health insurance premiums

• Charitable donations

• Union dues

• Retirement plan contributions

What is the main purpose of state income tax?

• To fund federal programs

• To support state government operations

• To provide financial aid to students

• To pay for international aid

How does discretionary government spending differ from mandatory spending?

• Discretionary spending is required by law, mandatory spending is not

• Discretionary spending is optional and determined annually, mandatory spending is required by law

• Discretionary spending is for defense only, mandatory spending is for social programs

• Discretionary spending is for state governments, mandatory spending is for federal government

Analyze the impact of claiming more allowances on a W-4 form.

• It increases the amount of federal tax withheld

• It decreases the amount of federal tax withheld

• It has no effect on federal tax withholding

• It increases state tax withholding

Which of the following is a post-tax deduction?

• Health savings account contributions

• Life insurance premiums

• 401(k) contributions

• Flexible spending account contributions

What is the primary function of federal income tax?

• To fund state government operations

• To support federal government programs and services

• To provide loans to small businesses

• To pay for local infrastructure projects