NEW
Font size
WorksheetsEverfi Tax Simulation: Understanding Taxes Version 2 ENHANCED
Total questions: 25
Worksheet time: 19mins
Scarlett, Evelyn, and Elijah are learning about taxes in school. Their teacher asks them which services their taxes help fund and that they benefit from now. Which of the following should they choose?
Public schools, emergency services, and roads
Social Security, investments, and the military
Roads, Social Security, and education
Military, stock market access, and internet
Aria is learning about different types of taxes in her social studies class. She wants to know which tax provides income for retirees and people with disabilities. Which tax should Aria learn about?
Social Security tax
Federal income tax
Property tax
State and local taxes
Samuel is preparing his taxes and wants to understand the difference between a tax deduction and a tax credit. How is a tax deduction different from a tax credit?
Deductions are direct payments to the IRS; credits are refunds.
Deductions reduce your taxable income; credits directly lower what you owe.
Deductions only apply to business expenses; credits only to personal ones.
Deductions are for high-income earners only; credits are for everyone.
Kai and Maria have both kept all their receipts for the year. How should they choose between the standard deduction and itemizing?
Choose the standard deduction because it is more precise.
Pick whichever gives them the larger deduction.
Use itemized deductions since they have their receipts.
Check their tax bracket to decide.
Avery is getting ready to file her taxes this year. What documents should she gather before starting the process?
Spreadsheets showing all your financial accounts
Details of any stocks or bonds purchased last year
Proof of income and receipts for possible deductions
Receipts from every purchase made during the year
James just finished his federal return and is expecting a refund. What are the last two steps before he is done?
Have the person claiming him as a dependent sign his return.
Send a copy to his bank and to his guardian.
He must have made a mistake—redo the whole return.
File state taxes and choose a refund method.
Anika is considering different types of work. She wants to take on projects for various companies without committing to a single employer long-term. Which option best explains the type of work Anika is interested in?
Jobs done remotely from any location
Jobs based on internet data use
Temporary job placements by an agency
Short-term, freelance or contract work
Aria is working as a gig worker, while Avery is a full-time employee at a company. How is tax withholding different for Aria compared to Avery?
Gig workers’ pay does not have taxes withheld.
Gig workers do not pay federal taxes.
Full-time workers have lower tax rates.
Gig workers always pay less in taxes.
David recently started working as a gig worker, driving for a rideshare company. Why does David have to pay taxes every three months?
Employers set payment schedules for workers.
Since no taxes are withheld, quarterly payments help avoid a large bill.
Gig workers don’t receive steady pay, so quarterly is easier.
To combine taxes with union fees.
Henry recently learned about the Earned Income Tax Credit (EITC) while preparing his taxes. Why might Henry claim the EITC?
So the government can track wage data.
To help improve community funding.
So employers know if they’re paying fairly.
To lower their taxes if they qualify.
Max lives with his aunt all year, and she pays over half of his expenses. What else is required for her to claim him as a dependent?
She must be his legal guardian.
She needs to drive him to school and buy gas.
He must be enrolled full-time in school.
She must provide food and make dinner.
Abigail is a working parent who pays for childcare so she can go to her job. What is one benefit Abigail could receive by claiming the Child and Dependent Care Tax Credit?
It improves public services like schools and healthcare.
It decreases the overall taxes the household owes.
It helps with applying to college and scholarships.
It makes tax filing quicker and cheaper.
Luna received stock dividends from a company she invested in. Why are these stock dividends considered taxable income?
They split your stock, doubling your returns.
They are interest you earn on stocks.
They are payments based on how well the company performs.
They are based on dividing your income by your tax rate.
Scarlett received a form from her bank called IRS Form 1099-INT. What information is reported on this form?
Interest earned from your bank account
Money made from selling stocks or crypto
Dividend payments from a savings account
Total value of all financial accounts
Sydney, Elijah, and Abigail used crypto to make various transactions throughout the year. What must they report on their taxes?
Selling crypto and using it for purchases.
Everything except when they first bought it.
Only when they made a profit.
Only when they converted it into U.S. dollars.
What does Form 1098-T show?
Tuition and educational payments made
Taxes paid on student loans
All your loans and financial aid
A university’s tax-exempt status
Dana wants to deduct dorm supplies such as bedding and cookware. Why can’t she?
The items aren’t owned by her college.
They were purchased too long ago.
Her parents paid for them.
They’re not essential for education.
Jeremiah is a student, makes under $30K, and is a dependent. Can he claim education tax benefits?
Yes, because he is a full-time student.
Yes, if the costs are directly tied to his education.
No, because his parents can claim the credit instead.
No, because he earns too much.
What is the main advantage of using tax software to file taxes?
It simplifies the process and reduces errors.
It allows you to avoid paying any taxes.
It eliminates the need for any documentation.
It guarantees a larger refund.
Jason is 15 and earned $1,450 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 or older to file taxes.
Yes, because he may get a refund.
Yes. You must file taxes even if you didn't earn enough.
Mason is filling out his tax return and wants to reduce his taxable income. He financially supports his younger sister and is considering claiming her on his tax return. What is the best word to describe someone like his sister, whom he can claim to lower his taxes?
Dependent
Taxpayer
Beneficiary
Claimant
Rohan and Elijah have invested in a company. Every few months, they receive money from the company's profits, which is paid out to them as shareholders. What is the best word to describe this payment?
interest
revenue
capital gain
dividend
Emma works at a local store and receives a salary for her work. What is the best word to describe the type of income Emma is earning?
profit income
revenue income
dividend income
earned income
Ava receives her monthly paycheck and notices that a certain amount is deducted by the federal and state governments before she gets her take-home pay. What is the best word to match this type of tax?
Property tax
Sales tax
Income tax
Payroll tax
Grace is filing her taxes this year. She does not have enough expenses like medical bills or donations to itemize her deductions. What is the best word to describe the standard dollar amount that reduces her taxable income in this situation?
standard deduction
itemized deduction
tax credit
exemption
