Unit 8 Study Guide - Taxes

Grace has decided to e-file her taxes this year. Why should she file her state and Federal taxes together through the same software?

• Both tax returns are actually reviewed by the Federal government, so filing them together expedites the process.
• If she files them together, she's more likely to receive a larger refund or get a tax credit.
• A majority of e-filing software companies provide a significant discount if you file both returns together.
• Grace will have just one submission ID, which makes it less likely that the state will reject her state tax return.

Jay filed his taxes and found out he owes money. What is the most reasonable explanation as to why she owes money in taxes?

• Not enough money was withheld from his paychecks.
• Too much money was withheld from his paychecks.
• When filing his taxes, Jay accidentally checked “Married filing jointly” instead of “Single”.
• The IRS is asking Jay for a future advance on his possible taxes for next year.

Which of the following is the largest source of income for the Federal government?

• Payroll tax
• Income tax
• Corporate tax
• Property tax

Why should you accurately complete a W-4 form any time you start a new job or change your tax status?

• You need a copy of your W-4 to file your tax return annually
• Your W-4 determines how much Federal income tax money your employer should withhold
• Your W-4 determines your total tax bill at the end of the year
• Completing a W-4 will guarantee you receive a large tax refund

Which of the following people might want to claim EXEMPT on their W-4 form?

• John, who is 20 and expects to earn $12,850 from his internship.
• Stacey, who is 16 and expects to earn $7,500 from her part-time job.
• David, who is 23 and expects to earn $15,000 from his part-time job.
• Hannah, who is 25 and expects to earn $55,000 from her full-time job.

The Federal government spends the most amount of tax money on...

• Science
• Veterans
• Education
• Health

All of the following are factors that impact the amount someone may pay in taxes EXCEPT...

• Income
• Political party
• State
• Marital status

Tamara found out that she owes $3,200 in taxes. She cannot afford to pay the entire amount right now, so she is going to arrange an installment plan with the IRS. What is the one thing that Tamara should be prepared for?

• She'll have to redo her tax return so that she can note she'll be using an installment plan.
• She will pay more than $3,200 because she will be paying additional money in interest with each payment.
• Her credit score may decrease because of her inability to pay back the total she owes to the IRS.
• She will have to meet an earlier tax filing deadline next year in case she owes money again.

Which person should expect to receive a W-2 form from their employer by January 31st, 2021?

• Marcy, who has sold handcrafted vases online for the past 5 years
• Jose, whose first job started on January 10, 2021
• Arnie, who did an unpaid internship in summer 2020 for a local newspaper
• Kelly, who has worked for the same department store for the last 15 years

What are 2 examples of discretionary spending?

• Social Security
• Medicare
• Education
• Military