Taxes

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 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?

• Making even one mistake on your federal taxes can result in your being convicted of a crime

• The 1040 form determines whether you owe additional taxes or are entitled to receive a refund from the government

• 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

Which of the statements below is TRUE about filing your taxes, assuming your only income comes from the salary you earn at BigTech Company?

• 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 must file your tax return by April 15th of the following year or request an extension by that date

• 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 federal and state income taxes?

• W-2

• W-4

• I-9

• 1040

Which of the following paycheck withholdings puts money into a retirement investment fund that you will manage?

• Social Security

• Medicare

• 401(k) contribution

• Federal income taxes

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?

• $120

• $500

• $600

• $700

Your friend Laila is talking to you about the benefits of tax filing software. Which of the following is true?

• Filing your taxes using the software is always free of charge.  

• You can avoid the costs 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

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

When determining whether you NEED to file a federal tax return, each of these questions matters EXCEPT…

• How much income did you earn this year? 

• What type of income did you earn this year? 

• What state do you live in? 

• Are you claimed as a dependent on anyone else's tax return?