Tax Time

What are taxes?

• Voluntary contributions to the government

• Required payments of money to governments for public goods and services

• Optional fees for using public services

• Investments in private companies

Which of the following is NOT a common type of tax?

• Income tax

• Payroll tax

• Sales tax

• Entertainment tax

What is a tax credit?

• A fixed amount of money added to your tax bill

• A service charge by the government

• A dollar-for-dollar reduction in a tax

• A penalty for late tax payment

How are income taxes collected from employees?

• Through voluntary contributions

• By deducting money from their paycheck

• By a one-time annual payment

• Through direct billing by the government

What are self-employed individuals required to do regarding taxes?

• Pay taxes only if they earn above a certain amount

• Pay taxes through withholding like regular employees

• Pay estimated taxes four times throughout the year

• Wait to pay taxes until they receive a tax bill at the end of the year

What does FICA stand for?

• Federal Insurance Contributions Act

• Federal Income Contributions Association

• Fiscal Insurance Community Agreement

• Financial Insurance Contributions Act

Who is responsible for paying payroll taxes?

• Only the employer

• Only the employee

• Both the employer and the employee

• Neither the employer nor the employee

What is a progressive tax system?

• A system where everyone pays the same percentage of income

• A system where high-income groups pay a larger percentage of income than low-income groups

• A system where low-income groups pay a larger percentage of income than high-income groups

• A system where only high-income groups pay taxes

Which of the following is an example of a property tax?

• Tax on income

• Tax on retail products

• Tax on real estate, boats, automobiles, and recreational vehicles

• Tax on services

What is the main suggestion from the IRS regarding deductions from paychecks?

• To estimate and pay taxes annually

• To complete a new Form W-4 each year or when personal or financial situation changes

• To pay a fixed amount regardless of earnings

• To avoid paying taxes if possible