WorksheetsIncome and Tax Basics
Total questions: 35
Worksheet time: 30mins
Which term means the total amount of money earned before taxes are taken out?
Net income
Gross income
Withholding
Payroll tax
Which term describes the money you actually receive after taxes?
Net income
Sales tax
Earned income
Gross income
Why should budgets be based on net income?
Net income is higher
Net income includes bonuses
Net income is what you actually receive
Net income avoids taxes
What is earned income?
Money received as gifts
Money refunded by the IRS
Money earned from working
Money borrowed from a bank
What is withholding?
Money paid at the end of the year only
Money paid when shopping
Money taken from a paycheck for taxes
Money saved for emergencies
Why does the government use withholding?
To spread tax payments throughout the year
To collect taxes all at once
To avoid filing tax returns
To increase refunds
Which tax is taken out of each paycheck to fund Social Security and Medicare?
Property tax
Payroll tax
Income tax
Sales tax
What does FICA pay for?
Roads and bridges
State programs
Schools and libraries
Social Security and Medicare
Which form do you fill out when you start a new job?
Tax return
Pay stub
W-4
W-2
What is the purpose of the W-4?
To report yearly income
To calculate net pay
To file taxes
To tell your employer how much tax to withhold
Changing your W-4 affects:
How much tax is withheld
Your hourly wage
Your total income
Your job title
Which form summarizes your earnings and taxes for the year?
Pay stub
W-4
W-2
Budget
Who sends you a W-2?
The IRS
You fill it out yourself
Your bank
Your employer
What is a tax return?
A savings account
A weekly earnings report
A form filed to settle taxes owed or refunded
A paycheck
What does filing a tax return do?
Changes your pay rate
Ends withholding
Confirms if you overpaid or underpaid taxes
Eliminates payroll taxes
What does a tax refund mean?
You avoided taxes
You overpaid tax during the year
You paid too little tax
You earned more money
What does a balance due mean?
You paid the exact amount
You underpaid taxes
You received a bonus
You paid sales tax
According to the lesson, what is the ideal tax result?
Large refund
Balance due
Break-even
No filing required
Why are large refunds not ideal?
They are taxed again
They increase payroll taxes
They mean you gave the government extra money
They reduce income
Which action helps avoid tax surprises?
Ignoring tax forms
Budgeting with gross income
Filing taxes on time
Waiting until April
Which is an example of income tax?
Tax on shoes
Tax on earned wages
Tax on groceries
Tax on gasoline
Which is an example of sales tax?
Social Security deduction
Medicare deduction
Tax added at a store checkout
Federal withholding
Payroll taxes are taken out:
Once a year
When filing taxes
From each paycheck
Only after overtime
Which statement is true?
W-4 controls withholding
W-2 controls withholding
W-2 changes your pay rate
W-4 summarizes yearly income
Why is filing on time important?
To avoid paying taxes
To confirm taxes are settled correctly
To increase refunds
To avoid payroll deductions
Which action is risky?
Budgeting with net income
Relying on refunds to pay bills
Filing on time
Updating a W-4
Federal income tax is based on:
Your job title
How much you earn
Your employer
What you buy
Which form is used to file taxes?
Tax return
W-2
W-4
Pay stub
Which tax is paid when buying goods?
Income tax
Sales tax
Payroll tax
Federal withholding
What is the main purpose of filing a federal tax return?
To increase income
To change jobs
To apply for benefits
To settle taxes owed or refunded
Gross & Net Pay
You work 25 hours at $14 per hour.
Federal income tax = 10%
Payroll tax (FICA) = 7.65%
Gross pay = __________
Federal tax = __________
Payroll tax = __________
Gross & Net Pay
You work 40 hours at $12 per hour.
Federal income tax = 10%
Payroll tax = 7.65%
Gross pay = __________
Net pay = __________
Overtime Pay
You work 46 hours at $15 per hour.
Overtime is paid at time-and-a-half after 40 hours.
Regular pay = __________
Overtime pay = __________
Gross pay = __________
Overtime + Net Pay
Using Question 33’s gross pay, calculate net pay.
Federal income tax = 10%
Payroll tax = 7.65%
Total deductions = __________
Net pay = __________
Application
Explain why someone could get a refund or owe money when filing a tax return.
(2–3 sentences)
