WorksheetsUnit 4 - Taxes & You
Total questions: 45
Worksheet time: 23mins
Mandatory government spending includes which of the following?
Social Security and Medicare
Infrastructure and Science
Healthcare and Military
Education and Agriculture
What does the term "withholding" mean in reference to your paycheck?
How much is being taken out of your paycheck for things like taxes, employer sponsored health insurance, and retirement
How much you earn and includes salary, bonus and commissions
How much you are going to owe the government when you file your annual tax return
The amount of your paycheck that you are NOT being taxed on
When do you start paying income taxes?
When you make more than the minimum income requirement?
When you turn 18
When you get a full-time job (part-time does not count)
When you are notified by the IRS that you are required to pay federal income taxes
Why is it important to be extremely careful when completing your 1040 form?
The 1040 form determines whether you owe additional taxes or are entitled to receive a refund from the government
Making a mistake will disqualify you from receiving future refunds
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
If your only income is salary paid by your employer, which of these statements about filing your taxes is true?
You must file your tax return by the deadline (typically April 15th of the following year) or request an extension by that date
You need to file your tax return by the end of the calendar year (typically December 31st)
If your employer takes out federal income taxes through payroll withholdings, you do not need to file a tax return
You do not need to pay any income taxes until April 15th, so you should ask your company to wait until after that date to withhold any money
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
Which of the following paycheck withholdings put money into a retirement investment fund that you will manage?
401(k) contribution
Social Security
Medicare
Federal income taxes
When determining whether you NEED to file a federal tax return, each of these questions matter EXCEPT...
What state do you live in?
How much income did you earn this year?
What type of income did you earn this year?
Are you claimed as a dependent on anyone else's tax return?
Juanita has a part-time job that pays $12/hour and works about 50 hours every month. Her withholdings are Social Security (6.2%), Medicare (1.45%) and federal income tax (10%). What is her approximate net pay?
500
120
600
700
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?
Complete a W-4 form
Determine how much tax to withhold from her paychecks based on W-4 information
Send withholding amounts to the federal government
Complete a W-2 form
What is the name of the tax form that requires you to provide identification and proves you are eligible to work in the U.S.?
I-9
1099
1040
W-4
When you complete your 1040 form, if you overpaid your taxes and the government owes your money, that is called a ______.
refund
withholding
direct deposit
deduction
Your friend Laila is talking to you about the benefits of tax filing websites. Which of the following is true?
You can avoid the costs of having to pay a professional, though you may have to pay for e-filing online
If you owe money to the IRS, you receive a discount if you e-file use a tax filing website
You are guaranteed a higher refund than if you were to use a paper form or hire a professional
Filing your taxes using a website is always free of charge
Jessica is 16 years old and earned $1,100 through her photography side gig. Her parents can claim her as a dependent on their tax return. All of the following statements are true EXCEPT...
Jessica should expect to receive a W-2 in January
Jessica is required to file an income tax return
Jessica is required to pay a 15.3% self-employment tax
Jessica can file her own tax return even though her parents are claiming her as a dependent
Which of the following describes what a "dependent" is for tax purposes?
A child or adult that you support financially
Someone who is temporarily disabled
An adult who financially supports you
Someone who is a full-time student under the age of 30
If a taxpayer fills out their W-4 in a way that does not withhold enough money to cover their tax obligation, what is the most likely outcome after they file their taxes?
They will owe a payment to the IRS
They will receive a refund
They will be audited
They will be charged with tax evasion
Which of the following statements about the W-2 form is TRUE?
You need a separate W-2 from EACH of your employers in order to file your taxes
A W-2 lists all the money you earned in cash over the last year
The total wages you earned from ALL jobs you worked in the previous year appear on ONE W-2 form
The W-2 includes information about the interest you earned from your investments
Akshay worked at a cafe while he was a college senior in Boston, Massachusetts. After graduating in June, he moved back to his home in California and started a full-time job in September. Which of the following statements is true?
Akshay will need to file a federal tax return and a state tax return for both Massachusetts and California
Akshay will need to file only a federal tax return
Akshay will need to file a federal tax return and a state tax return for Massachusetts
Akshay will need to file a federal tax return this year and file state returns the following year
All of the following people would be required to file a tax return EXCEPT...
Max, whose total income from three separate part-time jobs was $9,500
Janet, who earned $28,000 but was paid entirely in cash
Isaiah, who owns his own business and generated an income of $7,000
Dani, who is a cafe barista and earned $13,000 in wages and $250 in tips
Marquis is starting a fast food job during his senior year of high school. He lives with his parents and they will claim him as a dependent on their taxes this year. He earns $2,000. Based on how he completes his W-4, his employer withheld $200 in federal income taxes from his paychecks. What will happen if Marquis doesn't file taxes in April?
Nothing will happen, but Marquis will miss out on his potential refund
The IRS will refund his $200 directly to him
The IRS will refund his $200 to his parents
The IRS will fine Marquis $75 or more for not filing taxes
Grace has decided to e-file her taxes this year. Why should she file her state and federal taxes together through the same software?
Grace will have just one submission ID, which makes it less likely that the state will reject her state tax return
Both tax returns are actually reviewed by the Federal government, so filing them together expedites the process.
If she files them together, she's more likely to receive a larger refund or get a tax credit
A majority of e-filing software companies provide a significant discount if you file both returns together
Why should you accurately complete a W-4 form any time you start a new job or change your tax status?
Your W-4 determines how much Federal income tax money your employer should withhold
You need a copy of your W-4 to file your tax return annually
Your W-4 determines your total bill at the end of the year
Completing a W-4 will guarantee you receive a large tax refund
Jay filed his taxes and found out he owes money. What is the most reasonable explanation as to why he owes money in taxes?
Not enough money was withheld from his paychecks
Too much money was withheld from his paychecks.
When filing his taxes, Jay accidentally checked "Married, filing jointly" instead of "Single"
The IRS is asking Jay for a future advance on his possible taxes for next year
The Federal government spends the most amount of tax money on...
Health
Veterans
Education
Science
Which of the following people might want to claim EXEMPT on their W-4 form?
Stacey, who is 16 and expects to earn $7,500 from her part-time job
John, who is 20 and expects to earn $13,300 from his internship
David, who is 23 and expects to earn $15,000 from his part-time job
Hannah, who is 25 and expects to earn $55,000 from her full-time job
Which of the following statements is TRUE about the cost of living and state and local taxes?
The cost of living and how much you pay in state and local taxes are not directly related, but they can impact how much extra money you have from each paycheck
States with HIGHER costs of living have HIGHER state and local taxes
States with HIGHER costs of living have LOWER state and local taxes
The state and local governments use the cost of living to determine what the tax rates should be
All of the following are factors that impact the amount someone may pay in taxes EXCEPT...
political party
income
state
marital status
Tamara found out that she owes $3,200 in taxes. She cannot afford to pay the entire amount right now, so she is going to arrange an installment plan with the IRS. What is the one thing that Tamara should be prepared for?
She will pay more than $3,200 because she will be paying additional money in interest with each payment
She'll have to redo her tax return so that she can note she'll be using an installment plan.
Her credit score may decrease because of her inability to pay back the total she owes to the IRS.
She will have to meet an earlier tax filing deadline next year in case she owes money again.
Which of the following is the largest source of income for the Federal government?
income tax
payroll tax
corporate tax
property tax
Which person should expect to receive a W-2 form from their employer by January 31st, 2021?
Kelly who has worked for the same department store for the last 15 years
Arnie, who did an unpaid internship in summer 2020 for a local newspaper
Jose, whose first job started on January 10, 2021
Marcy, who has sold handcrafted vases online for the past 5 years
Which of the statements about the current U.S. tax system is TRUE?
Our current system is described as being a progressive system because it imposes higher rates on those who earn more
Your friend tells you his marginal tax rate is 22%. That means that he pays 22% on all of his income
Everyone in the U.S. who makes more than the minimum income requirement pays one flat tax rate
Our current system is described as being a regressive system because it imposes higher rates on those who earn less
Jeremy just started a new job and completed his W-4 form. Who should he submit it to?
His employer
His spouse
The IRS
No one- he keeps it for his records
All of the following information should appear on your W-2 form EXCEPT...
Your interest earned on savings and investments
Your name, address, and employer information
Your wages, tips, and compensation from that particular employer
The amount you paid during the last year for Medicare and Social Security
What penalty might you face if you fail to file a tax return?
You are charged 5% of the amount you owed every month
You are charged 10% of the amount you owe every month
You could go to jail for up to 6 months
You are charged an additional processing fee for the tax returns you file in the next 5 years
Who is legally required to file a tax return? (Note: All of the following people can be claimed as a dependent.)
Risha, who earned $14,700 from her internship.
Greg, who earned $1,250 from his part-time job.
Matthew, who received $800 in investment income.
Madison, who earned $350 from her cake business.
Which of the following statements about marginal and effective tax rates is TRUE?
Marginal rate is based on your total income and determines what tax bracket you are in, while effective rate is the average tax rate on your entire income.
Marginal rate is the average tax rate on your entire income, while effective rate is based on your total income and determines what tax bracket you are in.
Marginal rate is the total amount of money you paid in taxes last year, while effective rate is the refund amount you received last year.
Marginal rate and effective rate can be used interchangeably, as they mean the same thing.
Samantha was able to lower her overall tax burden by directly reducing the amount of money she owes to the IRS. Which of the following most likely explains what happened?
She received tax CREDITS.
She claimed EXEMPT on her W-4 form.
She received a tax DEDUCTION.
She is considered a household employee, and is therefore exempt from self-employment taxes.
When people refer to "Tax Day" they mean. . .
April 15, the typical deadline to file your taxes
January 1, the first day of the calendar year
December 31, the last day to earn income and have it count toward that tax year
Whatever day your tax refund comes in the mail
Which statement about filing a tax return is FALSE?
Filing with a tax professional is the best option for those people whose tax situation has remained the same and is relatively simple
Paper filing your tax return is free, but it takes a lot longer to process and get back a refund if you are owed one
People who are unfamiliar with filing taxes can still use e-filing software, because there is usually access to support if they need it
Filing with a tax professional is often the method that is most susceptible to scams
A dependent is someone who. . .
relies on someone else to provide more than half of their financial support
relies on someone else to provide a quarter or less of their financial support
is able to fully financially support themself
provides financial support for someone else
When you sit down to file your 1040 form, which document(s) should you have in front of you?
W-2 form(s)
W-4 form(s)
I-9 form(s)
Checking account statements from last year
All of the following are ways to pay any taxes you owe EXCEPT. . .
Use an app or website like Paypal or Venmo
Make a payment directly from your bank account
Sending a check
Using your debit or credit card to make an online payment
What form do you use to file a tax return with the IRS?
1040
W-4
W-2
I-9
Which of the following high schoolers would be considered a self-employed contractor?
Kelly, who makes homemade jewelry in her spare time and sells them through her online store
Amy, who babysits during the week and weekends
Shrini, who mows lawns for his neighbors after school
Joel, who delivers his neighborhood's newspapers on weekday mornings
Which is a type of EARNED income?
Money Received from Bonuses
Social Security Benefits
Retirement Account Distributions
Unemployment Compensation
