Tax Reiew

What does the term 'withholding' mean in reference to your paycheck?

• The amount of money you receive in tax refunds
• The amount of money your employer pays you before taxes are taken out
• The amount of money your employer pays you after taxes are taken out
• The amount of money you owe the government in taxes

When do you start paying taxes?

• When you file your first tax return
• When you earn more than the standard deduction amount
• When you start your first job
• When you turn 18 years old

Why is it important to be extremely careful when completing your 1040 form?

• To avoid overpaying your taxes
• To avoid being audited by the IRS
• To avoid underpaying your taxes
• To avoid penalties for mistakes or omissions

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
• 1099
• 1040
• W-4

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

• Federal income tax
• Social Security
• Medicare
• 401(k)

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

• How much money you earned during the year
• Your favorite color
• Your age
• Your filing status

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?

• $660
• $540
• $630
• $720

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

• It is only available to people who make over $100,000 per year
• It is always free to use
• It can help you find deductions and credits you might have missed
• It is less secure than filing taxes on paper

Which of the following describe what a 'dependent' is for tax purposes?

• All of the above
• Someone you claim on your tax return
• Someone who lives with you
• Someone who relies on you for financial support

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...

• Setting up a payment plan
• Paying with cash
• Writing a check
• Paying with a credit card