Income Tax Essentials

What is taxable income?

• The total amount of income used to calculate how much the government can tax you.

• The amount of income you earn from your job only.

• The total amount of money you spend in a year.

• The amount of income after taxes are applied.

Which of the following is NOT a tax bracket in the United States?

• 10%

• 22%

• 35%

• 50%

What is a tax deduction?

• A reduction in the amount of taxes you owe.

• A reduction in your taxable income.

• A fixed amount everyone gets to reduce their taxes.

• An increase in your tax refund.

What is a tax credit?

• A direct reduction of your tax bill.

• A reduction in your taxable income.

• A percentage of your income that you have to pay in taxes.

• A fixed amount added to your tax refund.

Which filing status typically has the highest standard deduction?

• Single

• Married Filing Jointly

• Head of Household

• Married Filing Separately

What does the standard deduction do?

• Increases your tax bill.

• Reduces your taxable income.

• Gives you a tax credit.

• Determines your tax bracket.

If you are single with no dependents, what is your filing status likely to be?

• Married Filing Jointly

• Head of Household

• Single

• Qualifying Widow(er)

Which of the following is NOT a type of income tax deduction?

• Mortgage Interest

• Charitable Contributions

• Sales Tax

• Grocery Bills

What is the purpose of tax brackets?

• To determine how much you will receive as a tax refund.

• To categorize taxpayers based on their filing status.

• To apply different tax rates to different levels of income.

• To calculate the standard deduction.

Which of the following would qualify as a tax credit?

• Home office expenses

• Child Tax Credit

• Student loan interest

• State taxes paid