Study Guide: Understanding Taxes & Your Pay Stub

What are taxes?

• Optional payments made to the government by individuals and businesses

• Mandatory payments made to the government by individuals and businesses

• Payments made only by businesses

• Payments made only for healthcare

Which type of tax is deducted from your paycheck?

• Sales Tax

• Property Tax

• Income Tax

• Payroll Tax

Fill in the blank: ________ tax is added to the price of goods and services and is seen at checkout in stores.

• Sales

• Income

• Property

• Excise

Which type of tax is billed annually or monthly for owning a house or land?

• Property Tax

• Income Tax

• Sales Tax

• Excise Tax

Payroll tax is used to fund which programs?

• Social Security and Medicare (FICA taxes)

• Unemployment insurance and food stamps

• Public schools and libraries

• Highway construction and maintenance

Which type of government spending is required by law and continues unless changed by Congress?

• Discretionary Spending

• Mandatory Spending

Who pays taxes?

• Anyone who earns an income, including part-time workers and students

• People who make purchases (sales tax)

• Homeowners and landowners (property tax)

• Only full-time workers

What is gross pay?

• Total earnings before any deductions

• What you actually take home after taxes

• Money removed before tax is calculated

• Money your employer adds on your behalf

What is net pay?

• Total earnings before any deductions

• What you actually take home, after taxes and other deductions

• Money removed before tax is calculated

• Money your employer adds on your behalf

Pre-Tax Deductions are _________?

• Money removed before tax is calculated (e.g. health insurance)

• Money added after tax is calculated

• A type of bonus given to employees

• Money deducted after tax is calculated