FIN LIT TAXES

What are Pre-Tax Deductions and Contributions?

Contributions taken out of your paycheck BEFORE taxes are calculated on your income

All of the following options are benefits we receive as a result of government spending EXCEPT...

Credit card debt forgiveness

progressive tax rate

sales tax (7.5%) because rich people buy more and therefore spend more than we do income tax

Last day of the calendar year. Your yearly earnings are final after this date.

dec 31

First day of the calendar year. Your earnings for the year begin on this date.

jan 1

First day you can submit tax returns for the previous year, although you likely will not have received necessary documents to file, such as your W-2

jan 23

flat tax rate

something that everyone pays the exact same amount no matter what ($60 to register your car because everyone pays this no matter what kind of car you have)

Hiring a tax professional

when: Selling stocks Buying and selling property Bankruptcy Got married or divorced Inherited money Family death

You were unable to file your taxes before the April deadline and your application for an extension was approved. What month was your deadline extended to?

October

If you're looking to pay as little as possible to file your taxes BUT you're worried about making mistakes, which tax preparation method would be your best option?

Online tax preparation service

Tax preparation websites

Designed to help you get as many tax deductions and credit as possible Access to professional tax help Quicker returns

What is the difference between gross pay and net pay?

Gross pay is before taxes and deductions are subtracted; Net pay is your take-home pay

What are two examples of Employer Contributions?

Health insurance and 401(k) 401(k) and Roth IRA

1040

I am completed every April Anyone can use me Beware, there is a LOT to fill out

w-4

I am received whenever you start a job You list information about yourself and your family on me I determine how much money gets taken out of each paycheck

Which of the following statements most accurately describes why it's important to correctly fill out a W-4 form?

It determines how much money is withheld from your paycheck and can result in under or overpayment of taxes if filled out incorrectly

Old-fashioned paper filing

Pro: you are in charge Con: easy to make mistakes

Miguel has been working at his job for 3 years and already filled out a W-4 when he was first hired. This year, he just got married and is planning on filing his taxes jointly with his spouse. What should he do?

Request to fill out a new W-4 from his employer

Which of the following statements about the W-4 form is TRUE?

This form is given to employees on their first day on the job The purpose of the form is to let employers know how much money to withhold from an employee's paycheck for taxes

What is the purpose of the self-employment tax (SECA)?

To tax self-employed individuals an equivalent amount for Social Security and Medicare since FICA taxes aren't taken out of their paycheck

You recently accepted a new job and your first day is next week. What form will you have to complete before you receive your first paycheck?

W-4

What are two important items detailed in your W-2 form? (select two correct answers)

Wages, tips, and other compensation Federal and state taxes withheld from your earnings

Which of the following people is/are legally required to file a tax return?

a single person under 65 and income of $12,550 65 or older married or filing jointly under 65 (both spouses) $25,100 head of household under 65 with income of $18,800

***Last day to submit income tax forms or to request an extension***

april 15

All of the following employee information is included on a W-2 form EXCEPT...

employee's date of birth

Which states have no income taxes at all?

Alaska, florida, nevada, south dakota, tennessee, texas, washington, wyoming

whenever you start a new job...

Complete a W-4, indicating how much in taxes you'd like withheld from each paycheck You will complete a new W-4 for every job you hold in a year Self-employed workers will not receive a W-4 and are responsible for making advance tax payments quarterly Complete an I-9, indicating eligibility for employment in the United States

You will need to include all of the following information on a W-4 form EXCEPT...

Earned income from previous job

Medicare and Social Security are mandatory spending categories funded by which type of taxes that are withheld from your paycheck?

FICA

When filling out a W-4 form, in what situation would a teen want to claim exemption from federal income taxes being withheld from their paycheck? What is the benefit of doing so?

Generally, if a minor's income does not exceed the standard deduction he or she will not be required to file a tax return.

w-2

I am received in January There is one of me for every job you work You can tell how much you earned and how much you paid in taxes by reading me

1099

I am received in January You get me if you are not an employee, but were paid by a company You can also get me for other types of income, such as gains and losses in brokerage accounts, dividend and interest payments, and more You probably didn't get taxes withheld if you got me, so you may have a big tax bill coming up Uber drivers, social media people... If you have interest on your bank account

i-9

I am received whenever you start a job You use me to prove that you are eligible to work in the U.S. You must provide forms of identification when submitting me

The federal income taxes that are withheld from your paycheck are used to pay for what?

Mandatory spending

On a pay stub, the amount of money that is left after withholdings is known as...

Net pay

Which of the following is the term for a tax rate that increases at higher levels of income?

Progressive tax

What is the amount of the self-employment tax (SECA) and how does it compare to FICA taxes?

SECA established that self-employed individuals would be responsible to pay the whole 15.3% FICA. This tax paid by self-employed individuals is known as the SECA, or more simply, the self-employment tax. These are called Federal Insurance Contributions Act (FICA) taxes. Your employer also pays a tax equal to the amount withheld from employee earnings. The self-employed pay Self-Employed Contributions Act (SECA) taxes on net earnings. SECA taxes also fund Social Security and Medicare.

All of the following are found on a W-2 form EXCEPT...

Sales taxes paid

All of the following people should receive W-2 forms EXCEPT

Serena, who is a freelance wedding photographer

Which of the following are two mandatory categories of government spending that are paid for by FICA taxes?

Social Security and Medicare

Briefly describe the purpose of taxes.

Taxes are the primary source of revenue for most governments. Among other things, this money is spent on essential things; to improve and maintain public infrastructure, including the roads we travel on, and fund public services, such as schools, emergency services, and welfare programs.

You are required to file a tax return in all of the following scenarios EXCEPT... You made $25,000 working a full-time job You made $3,000 from investments in the stock market You were self-employed and made $2,500 You made $9,000 working a part-time job

You were self-employed and made $2,500

Deadline for employers to mail W-2s to their employees (either by paper or electronically)

jan 31 If you worked multiple jobs in a year, you will receive multiple W-2s The vast majority of people wait until after this date to file taxes since without a W-2 it is difficult to accurately determine your taxes owed

Deadline for filing income tax returns that have received extensions

october 15

All of the following people can be claimed as a dependent for tax purposes EXCEPT... A 23 year old college student whose parents pay all of their expenses A 17 year old high school student with a part-time job whose parents pay for all of their expenses A 20 year old college student with a paid internship who pays for all of their own expenses A 25 year old cousin with no job who has lived in your parent/guardian's house for the last year

A 25 year old cousin with no job who has lived in your parent/guardian's house for the last year

Which statement best describes discretionary government spending?

A changing amount of money spent on different categories each year (housing, health related services, etc.)