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WorksheetsUnderstanding Tax Test
Total questions: 101
Worksheet time: 3hrs 32mins
Who primarily uses our tax money? (hint: choose 2 correct answers)
Your employer
Large corporations
Federal and state government
Local Businesses
Our tax money is spent on all of the following EXCEPT:
Social Security
The Military
Private School Education
National Parks
Which of the following is NOT a category in the Federal government's spending?
Mandatory spending
Discretionary spending
Interest on loans issued
Interest on national debt
Which of the following taxes is applied to wages, salaries, dividends, and interest earned?
Corporate Income Tax
Income Tax
Estate Tax
Excise Tax
The W-4 form lets...
the government know how much you paid in taxes last year
your employer know how much to withhold from your paycheck
the 3 major credit bureaus know how many dependents you have
you know how much you paid in taxes last year
Jess is 21, in college, & has a job that provides 65% of her support. Is she a dependent?
Yes
No
What item would you DEFINITELY see on a paystub?
Retirement
Healthcare
Gross Pay
Your occupation/role
By claiming "exempt" on the W-4 form...
You are paying all income taxes upfront at the START of the year.
You are requesting an extension to file your taxes
You will NOT have income taxes withheld from your paycheck.
You are paying all income taxes at the END of the calendar year.
Jason filed his 2022 tax return and owes money. If he doesn't want to pay a fee, when should he pay this amount by?
April 18th
October 15th
December 31st
January 1st of the next year
True or False: All wages, tips, and bonuses are taxable unless specifically excluded.
True
False
Which of the following things is TRUE about the W-2 form EXCEPT...
You get 1 W-2 form every year, even if you had multiple jobs
It contains information you'll need to fill out a 1040
It lets you know how much you earned last year
It lets you know how much was withheld from your paychecks
Jason is 15 and earned $1450 at his job last summer. Should he file a tax return?
No, because he didn't earn enough.
No, because you have to be 16 and older to file taxes.
Yes, because he may get a refund.
Yes. You must file taxes even if you didn't earn enough.
What do you need to file your 1040 form?
Your W-2
Your W-4
Your prior year's tax return
Income of $50,000 or more
Which of the following is NOT a way you can file your taxes?
Through a tax professional
Mailing in a paper tax return to the Federal government
Using tax software like TurboTax
Through your employer's HR department
True or False: A teen's earned income can be reported on a parent's tax return.
True
False
If a teen files a tax return, can the parent still claim him/her as a dependent?
Yes. All teens are dependents until they are 18 years old
No. If a teen files a tax return, he/she cannot be claimed
Yes, as long as the teen meets the dependency requirements
Yes, but the parent has to add the teen's income to theirs
Luisa earned $1,200 at her part-time job, and $500 from babysitting in cash. Which is TRUE?
She will report her total income as $1,700.
She will report her total income as $1,200.
She will report her total income as $500.
Luisa is required to file a tax return.
Earned income is any money you make from things like interest and dividends.
True
False
If you owe taxes, which of the following is FALSE?
You can make a payment using cash
You can delay your payment deadline
With an agreement, you can pay it in installments
You can make a payment with a debit, but not credit card
Which is TRUE if you do not pay your taxes?
You owe twice as much the following year
You're more likely to be approved for low interest loans
You cannot go to jail (but you will be heavily fined)
Your credit score may be impacted
the total amount of taxes owed
tax liability
federal tax collected on the value of a person' property at the time of death
estate tax
a state tax collected on the property left by a person by a will to their heirs
inheritance tax
a tax on wages, salaries and self employed earnings
income tax
a form on which a taxpayer reports how much money they have earned/received and the exact taxes that are owed
income tax return
Juanita has a part-time job that pays $12/hour and she 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?
$700
$500
$120
$600
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 your total tax bill at the end of the year.
Completing a W-4 will guarantee you receive a large tax refund.
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.
Why is it important to be extremely careful when completing your 1040 form?
Mistakes on your 1040 form make you ineligible for employment during the next year
Completing the 1040 incorrectly will mean the wrong amount of taxes will be withheld from your paychecks going forward.
The 1040 form determines whether you owe additional taxes or are entitled to receive a refund from the government.
Making even one mistake on your federal taxes can result in your being convicted of a crime.
When determining whether you NEED to file a federal tax return, each of these questions matters EXCEPT...
Are you claimed as a dependent on anyone else's tax return?
What type of income did you earn this year?
How much income did you earn this year?
What state do you live in?
All of the following are ways to pay any taxes you owe EXCEPT...
Using your debit or credit card to make an online payment
Use an app or website like PayPal or Venmo
Make a payment directly from your bank account
Sending a check
Which of the following statements about this W-2 is true?
Nikita earned a different amount of money outside of California than she did in California.
Nikita paid state income taxes of $1,535.00.
Nikita earned about $130,000 in 2019 based on the total of her Wages, Social Security wages, and Medicare Wages
Reaadle will use this W-2 to file their 1040 form.
Out of the following group, who does NOT have to file a tax return?
Dani, who is a cafe barista and earned $13,000 in wages and $250 in tips
Janet, who earned $28,000 but was paid entirely in cash
Max, whose total income from three separate part-time jobs was $9,500
Isaiah, who owns his own business and generated income of $17,000
Based on this pay stub below, how much was the paycheck written for?
$383.76
$970.00
$1,556.24
$778.12
When do you start paying taxes?
When you turn 18
When you make more than the minimum income requirement
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
At what point in the hiring process might you be expected to complete forms for taxes, health insurance, and other company benefits?
After you submit your resume but before you interview
Within the first few days of starting your new job
Once they've made you an offer, but before you formally accept the job
After you interview, so they can use the info to help decide whether to hire you
What does the term "withholding" mean in reference to your paycheck?
It is how much you are going to owe the government when you file your annual tax return.
It is how much is being taken out of your paycheck in taxes
It is how much you earn and includes salary, bonus and commissions.
It is the amount of your paycheck that you are NOT being taxed on.
Which statement about filing a tax return is FALSE?
Filing with a tax professional may be good for those people who got a divorce, bought a house, or changed their financial situation in another major way.
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 not familiar with filing taxes should not use e-filing software, because there is no access for support if they need it.
Filing with a tax professional is often the method that is most susceptible to scams.
Upon completing your 1040, you realize that you owe the IRS $427. Each of the following is a possible way to pay the taxes you owe EXCEPT...
Write a check and mail it to the IRS.
Tell the IRS to take out more taxes next year to pay back the $427.
Use your debit or credit card online or by phone.
Set up an auto-transfer from your bank account if you e-file.
Which form am I? I am received when you start a job. You use me to prove that you are eligible to work in the US, and you must provide forms of identification when submitting me.
I-9
1040
W-4
1099
Which of the following statements about the W-2 form is TRUE?
The total wages you earned from ALL jobs you worked in the previous year appear on ONE W-2 form.
You need a separate W-2 form from EACH of your employers in order to file your taxes.
The W-2 includes information about the interest you earned from your investments.
A W-2 lists all of the money you earned in cash over the last year.
Which tax form am I? I am received in January. There is one of me for every employer that you worked for in the previous year. I have information on how much you earned and how much you paid in taxes for the previous calendar year.
W-4
W-2
I-9
1040
How frequently is this employee paid?
Bi-weekly
Daily
Monthly
Weekly
You just graduated from college and have been fortunate to have received two job offers in your chosen field of accounting. Which of these factors would matter in making a decision about which firm to join?
1. Only the salary that each firm is offering
2. A combination of salary and the benefits package that each firm is offering
3. The company's tax rate
4. The city that each firm is located in
5. The career opportunities that each firm offers beyond the entry-level position
1, 4 & 5
1
2, 3, 4 & 5
2, 4 & 5
When people refer to "Tax Day" they mean...
December 31, the last day to earn income and have it count toward that tax year
January 1, the first day of the calendar year
April 15, the deadline to file your taxes
Whatever day your tax refund comes in the mail
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 federal income taxes?
W-4
W-2
1040
I-9
Marquis earns $2,000 as a cashier at a fast food restaurant 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. Based on how he completed 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 to his parents.
The IRS will fine Marquis $75 or more for not filing taxes.
The IRS will refund $200 directly to him.
How much did this person pay towards Medicare in this pay period?
$120.28
$28.12
$60.14
$14.06
Jessica worked as a teacher in Louisiana until June of last year. She then moved to Mississippi for her new job as an Assistant Principal and started working in August of last year. Which is TRUE for Jessica?
Jessica will have to file a state tax return for both Louisiana and Mississippi.
Jessica will have to file a state tax return for Louisiana only.
Jessica will have to file her Louisiana tax return THIS year. NEXT year, she will have to file a Mississippi state tax return.
Jessica will have to file a state tax return for Mississippi only.
Elaine is an employee. Which of the following steps is she responsible for?
Send withholding amounts to the federal government
Determine how much tax to withhold based on W-4 information
Complete a W-4
Request a W-2 annually
If you do contract work for a company where you are not an employee, you may receive which tax form in the mail?
W-2
1099
Schedule C
1040
Select the correct Filing Status.
Based on the information given, what number should be entered on Line 5e of the Schedule A?
Line 15 from the Hills 1040 showed taxable income of $81,625. What is their tax liability for 2023 using the tax table?
(a)
Match the mailing address for the type of tax return.
Department of Treasury
Internal Revenue Service
Ogden, UT 84201-0002
to receive a federal tax refund
Internal Revenue Service
P O Box 802501
Cincinnati, OH 45280-2501
to send in federal tax payment
Franchise Tax Board
PO Box 942840
Sacramento CA 94240-0001
to receive a California tax refund
Franchise Tax Board
PO Box 942867
Sacramento CA 94267-0001
to send in California tax payment
What entities cannot be members of an LLC?
Individuals
Banks
Insurance companies
Foreign entities
Which of the following entities cannot form an LLC?
Individuals
Corporations
Banks
Foreigners
What happens if an LLC fails to meet its legal and reporting requirements?
Members lose their personal liability protection
Members are exempt from taxation
Members are not affected
Creditors may pursue the members' personal assets
What type of agreement can ensure the smooth transfer of interests in an LLC?
What is one advantage of forming an LLC?
Double taxation
Unlimited liability for owners
Limited liability for owners
Exemption from state regulations
What is the primary responsibility of LLC owners?
Paying taxes on profits
Repaying the company's debts
Filing articles of organization
Hiring a registered agent
What is a common use of LLC registration among physicians' groups?
Tax evasion
Liability protection
Double taxation
Excessive taxation
What does an LLC separate to protect owners from debts and liabilities?
Personal assets
Corporate assets
Tax obligations
Partnership interests
What must be filed with the state to form an LLC?
Articles of incorporation
Articles of organization
Bylaws
Partnership agreement
How are LLC profits and losses typically reported for tax purposes?
Separately for each member
Directly at the corporate level
As part of the company's financial statement
Exempt from taxation
What is the primary disadvantage of an LLC upon the death or bankruptcy of a member?
Mandatory dissolution
Double taxation
Unlimited liability
Excessive taxation
What must an LLC file if it elects to be treated as a corporation for tax purposes?
Form 1065
Form 1120
Articles of organization
Bylaws
What document establishes the rights and obligations of each member of an LLC?
Articles of incorporation
Partnership agreement
Bylaws
Articles of organization
What is the main reason business owners opt for LLC registration?
Unlimited liability
Double taxation
Limited liability
Excessive taxation
Which of the following companies is NOT mentioned as an example of an LLC?
Alphabet (Google)
PepsiCo Inc.
Exxon Mobil Corp.
General Motors
What does LLC stand for?
Limited License Company
Limited Liability Corporation
Limited Liability Company
Limited Legal Company
How are profits and losses typically treated in an LLC for tax purposes?
They are taxed directly at the corporate level
They are taxed only once at the individual level
They are exempt from taxation
They are taxed separately for each member
What does it mean for an LLC to have 'flow-through' taxation?
Taxes flow directly to the government
Taxes flow directly to the corporate level
Taxes flow directly to the shareholders
Taxes flow directly to the members' personal tax returns
Which of the following is a characteristic of an LLC?
Flow-through taxation
Double taxation
Unlimited liability for owners
Mandatory dissolution upon bankruptcy
What is the primary advantage of LLCs over corporations regarding taxation?
Flow-through taxation
Double taxation
Exemption from taxation
Unlimited liability
What is the simplest form of business organization where a single individual owns and operates the business?
Partnership
Corporation
Sole Proprietorship
Limited Liability Company
Which type of business entity involves two or more individuals who agree to share profits and losses?
Sole proprietorship
Partnership
Limited liability company
Corporation
What type of business structure is considered a separate legal entity from its owners?
Corporation
Partnership
Sole Proprietorship
Limited Liability Company
Which business entity allows an individual or group to use the rights to a business name, logo, and products?
Trademark
Copyright
Franchise
Patent
What type of business entity combines the limited liability feature of a corporation with the tax benefits of a partnership?
Limited Liability Company (LLC)
Limited Liability Partnership (LLP)
Sole Proprietorship
General Partnership
In a sole proprietorship, who is personally responsible for all debts and liabilities of the business?
Owner
Customers
Manager
Investors
What is the term used to describe the agreement between partners that outlines the responsibilities and obligations of each partner?
Partnership Contract
Partnership Agreement
Collaboration Pact
Alliance Accord
Which type of business entity is owned and operated by a single person without any formalities or legal requirements?
Sole Proprietorship
Solo Company
Single Enterprise
Individual Business
What is the term used to describe the process of selling the rights to operate a business or sell products under a particular brand?
Distribution
Merchandising
Licensing
Franchising
Which business entity is known for its flexibility in management and taxation while providing limited liability protection to its owners?
Limited Liability Company (LLC)
Partnership
Sole Proprietorship
Corporation
Which legal document is necessary to form a corporation?
Partnership Agreement
Articles of Incorporation
Operating Agreement
Business License
What type of business structure allows its members to be taxed similarly to a partnership while enjoying the benefits of limited liability?
S Corporation
C Corporation
Limited Liability Company (LLC)
General Partnership
What is the primary advantage of franchising for the franchisee?
Exclusive rights to the product
Access to a proven business model
Full autonomy in business decisions
High investment returns guaranteed
What legal structure is designed for professionals such as lawyers, doctors, and accountants, providing limited liability while preventing them from raising capital through investors?
Limited Liability Partnership (LLP)
Professional Corporation (PC)
General Partnership (GP)
S Corporation
Which document outlines the operational and financial decision-making guidelines in a Limited Liability Company (LLC)?
Operating Agreement
Bylaws
Articles of Organization
Shareholder Agreement
Which form do you need to file your taxes?
W-1
W-2
W-3
W-4
Who can file your taxes? (Pick 2)
Tax Professional
Manager at work
Your teacher
You
Which form do you need to file your taxes?
1040
4010
1004
4001
IRS stands for
Internal Revenge Service
International Revenue System
Internal Revenue Service
The official date for when taxes are due
January 15
February 15
April 15
When you receive a new job, you are mandated to file a
Complaint
Divorce
W-4
When you are ready to file for taxes you must have form
W-2
W-6
WD40
W-2484
When filing for taxes, the government will inform you if you receive or pay the government. This is called
Tax write-off
Taxation
Tax return
Beth found out that she owes money to the IRS after filing her tax return. What is the most reasonable explanation as to why she owes money in taxes?
Too much money was withheld from her paychecks.
Not enough money was withheld from her paychecks.
The IRS is asking Beth for a future advance on her possible taxes for next year.
What does the term "withholding" mean in reference to your paycheck?
It is the amount of your paycheck that you are NOT being taxed on.
It is how much is being taken out of your paycheck in taxes.
It is how much you are going to owe the government when you file your annual tax return.
It is how much you earn and includes salary, bonus and commissions.
When do you start paying taxes?
When you turn 18
When you make more than the minimum income requirement
When you get a full-time job (part-time dose not count)
When you are notified by the IRS that you are required to pay federal income taxes
Your friend Lailia is talking to you about the benifits of tax filing software. Which of the following is true?
The Software comes with free access to professionals who can help you if you have a question.
You can avoid the cost of having to pay a professional, though you may have to pay for the software and/or e-filing online.
You are guaranteed a higher refund than if you were to use a paper form or hire a professional.
You are 50% less likely to make a mistake when e-filing your taxes than if you were to file them using paper forms.
Which of the following describe what a "dependent" is for tax purposes?
Someone under the age of 19 who you financially support
Someone who is temporarily disabled
Someone who financially supports you
Someone who is a full-time student under the age of 30.
Upon completing your 1040, you realize that you owe the $427. Each of the following is a possible way to pay the taxes you owe EXCEPT...
Write a check and mail it to the IRS.
Tell the IRS to take out more taxes next year to pay back the $427.
Use your debit or credit card online or by phone.
Set up an auto-transfer from your bank account if you e-file.
Elaine is an employee. Which of the following steps is she responsible for?
Determine how much tax to withhold based on W-4 information
Complete a W-4
Send withholding amounts to the federal government
Request a W-2 annually
Which of the following statements about the W-2 form is TRUE?
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-@ form
You need a separate W-2 form from each of your employers in order to file your taxes.
The W-2 includes information about the interest you earned from your investments.
