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Financial Lit C6 Income Tax

Total questions: 20

Worksheet time: 10mins

Name
Class
Date
1.

flat tax system

a)

tax rates are the same for all; also called proportional tax

b)

tax rates vary based on income levels

c)

only applies to corporate taxes

d)

a tax system with multiple rates for different income brackets

2.

tax

a)

an amount of money required to be paid to the government

b)

a type of investment

c)

a form of insurance

d)

a penalty for late payment

3.

constraint

a)

A limitation on a set of outcomes in math.

b)

An equation that has no solutions.

c)

A variable that can take any value.

d)

A method to solve complex problems.

4.

Flexible Spending Account (FSA)

a)

money withheld and placed into account(s) to pay for certain medical expenses, childcare, and prenatal care

b)

a type of savings account for retirement

c)

a government program for low-income families

d)

a loan for purchasing a home

5.

Federal Insurance Contributions Act (FICA)

a)

A federal tax for Medicare only

b)

Another name for Social Security (taxes)

c)

A state tax for unemployment insurance

d)

A tax on corporate profits

6.

tax liability

a)

the amount of taxes a person is responsible for paying

b)

a tax refund received from the government

c)

the total income earned by an individual

d)

the percentage of income that is taxed

7.

property tax

a)

a tax on something you own (for example, land or a house)

b)

a fee for public services provided by the government

c)

a tax on income earned from investments

d)

a charge for the maintenance of public roads

8.

tax-deferred contributions

a)

money withheld and placed in qualified accounts (like certain retirement accounts); taxes are not paid until the money is withdrawn

b)

immediate tax payments on contributions made to retirement accounts

c)

contributions that are taxed at a higher rate upon withdrawal

d)

funds that can be accessed without any tax implications

9.

progressive tax system

a)

tax rates remain constant regardless of income

b)

tax rates decrease as income increases

c)

tax rates increase as income increases

d)

tax rates are the same for everyone

10.

Form W-4

a)

Employees Withholding Allowance Certificate, which directs an employer how much income tax to withhold

b)

Tax Return Form for Self-Employed Individuals

c)

Application for Employer Identification Number

d)

Form for Reporting Foreign Bank Accounts

11.

filing status

a)

a description of your marital and family status reported when filing your income tax return

b)

a summary of your income and expenses for the year

c)

a record of your tax payments made throughout the year

d)

a classification of your tax deductions based on your income level

12.

taxable income

a)

the total income before any deductions

b)

the amount of income you must pay taxes on (after standard or itemized deductions)

c)

the income that is exempt from taxation

d)

the income earned from investments only

13.

gross pay

a)

total pay before taxes and other deductions

b)

net pay after taxes

c)

total deductions from salary

d)

average pay per hour

14.

tax avoidance

a)

using rules and laws to lower your taxes

b)

illegally evading tax payments

c)

paying taxes on time and in full

d)

taking advantage of tax loopholes without legal backing

15.

sales tax

a)

a tax on things you buy

b)

a fee for services rendered

c)

a tax on income earned

d)

a charge for using public services

16.

tax evasion

a)

lying or deliberately omitting items on tax return (or not filing/paying)

b)

accurately reporting all income and deductions

c)

filing taxes on time without any errors

d)

paying taxes in full and on time

17.

standard deduction

a)

an amount the IRS allows taxpayers to deduct from their income before computing their tax liability

b)

a tax credit that reduces the amount of tax owed

c)

a fee paid to the IRS for filing taxes

d)

an additional amount added to taxable income

18.

tax credit

a)

an amount you subtract from your tax AFTER it is calculated

b)

a fee added to your tax before it is calculated

c)

a percentage of your income that is taxed

d)

a refund you receive after filing your taxes

19.

Form 1099

a)

Tax form that reports interest earned, royalties, contract work, unemployment benefits, and other non-employee income

b)

Tax form used for reporting personal income tax

c)

Tax form for reporting corporate profits

d)

Tax form for reporting capital gains

20.

income tax

a)

a tax on your earnings

b)

a fee for public services

c)

a tax on property ownership

d)

a charge for government regulations