Personal Finance: Chapter 3

Fill in the blank A tax ______________ directly reduces taxes owed.

credit

The two main types of wages on salary are federal and state ______________ tax and Social Security tax. a) sales b) federal c) excise d) income

d) Income

Match the following forms to their purpose 1) W-2 2) 1099 3) W-2P Definitions A) Interest, dividends, capital gains and loses, self-employment income, lump-sum payments B) salary, wages and taxes withheld C) Pension income

1 = B 2 = A 3 = C

Which of the following are included in gross income? 1) Salaries 2) Wages 3) Adjustments 4) standard deductions 5) interest 6) Commissions 7) Exemptions

1) Salaries 2) Wages 5) interest 6) Commissions

Fill in the blank Components of income include earned income, investment income, and ____________________ income.

Passive income Earned income = is usually in the form of wages, salary, commission, fees, tips, or bonuses Investment income (aka investment income) = money received in the form of dividends, interest, or rent from investors Passive income = results from business activities in which you do not actively participate such as a limited partnership.

As "Tax Freedom Day" came in mid-April it means that the portion of the year people work to pay their taxes is represented by January 1 to : 1) December 1 2) Mid-April 3) January 31 4) July 1

2) mid-april

True/False The two main taxes on salary are estate taxes and income taxes.

False Main taxes on Salary are social security and income taxes For most people SS Tax is