Understanding Income Tax Concepts

What is the standard IRS form that individuals can use to file their annual income tax returns?

• 1040

• 1099

• W-2

• 940

Which form details all 'non-employee' compensation, including for specific jobs like freelancers or contractors?

• 1040

• 1099

• W-4

• 941

What is the term for profit from the sale of an asset, such as a stock or a bond, calculated by subtracting the price you initially paid from the price you then sold it for?

• Capital Loss

• Capital Gain

• Revenue

• Dividend

What is an exemption in terms of taxable income?

• A penalty for not paying taxes

• A set amount of money you can subtract from your taxable income per dependent

• A bonus added to your income

• A fee for filing taxes late

What does the Federal Insurance Contributions Act (FICA) require employers to do?

• Provide health insurance to employees

• Withhold taxes from wages for Social Security and Medicare

• Offer retirement plans to employees

• Pay bonuses to employees annually

What is the purpose of the I-9 form?

• To apply for a job

• To verify an employee's identity and eligibility to work in the U.S.

• To calculate tax deductions

• To enroll in health insurance

What are income taxes?

• Taxes paid on goods and services

• Taxes paid by employees to federal and state governments through paycheck deductions

• Taxes paid on property ownership

• Taxes paid on lottery winnings

What is a document attached to every paycheck that details your earnings and the amount withheld for taxes, health insurance, retirement funds, etc.?

• Payroll Tax

• Paycheck Stub

• Tax Bracket

• Progressive Tax

What are federal and state taxes that all employers must pay, based on a percentage of the employee's salary, toward social services such as Social Security and Medicare?

• Paycheck Stub

• Tax Bracket

• Payroll Tax

• Progressive Tax

What is a tax system that uses tax brackets to collect a larger percentage from the income of high-income earners than it does from low-income earners?

• Tax Bracket

• Payroll Tax

• Paycheck Stub

• Progressive Tax