Module 2: Employment & Taxes

Which of the following is NOT a possible tax or deduction that could be withdrawn from your paycheck? a) state income tax b) FICA c) sales tax d) contributions to retirement savings

c) sales tax

what is the purpose of the W-4 form?

to inform your employer of how much federal income tax to withhold from your paychecks

What do taxes pay for?

Schools, government departments, roads, and emergency services

Which of the following statements is true about education and lifetime earnings?

Generally, the more education you receive, the higher your lifetime earnings will be

The W-4 tax form is used to ___________.

tell your employer how much federal income tax to withhold from your paychecks to send to the IRS.

What is net pay?

the amount of money you're paid after all taxes and deductions are taken out of your paycheck

Generally, _____________ you receive, the higher your lifetime earnings will be.

the more education

Why is it necessary to have a W-2 or 1099 form when using tax preparation software?

These forms report income which needs to be used to file taxes

Deductions and credits can _______ what you owe in taxes each year.

reduce

What is the difference between gross and net pay?

Gross pay is before taxes are subtracted but net pay is after taxes are taken out

How does the government pay for roads, schools, and emergency services?

They are funded through taxes

Your employer sends you a _______ form that tells you how much you've made and how much you've paid in taxes in the last year.

W-2

Which of the following statements is true about taxes? a) taxes pay for schools first responders and roads b) taxes pay toll road fees and office buildings c) taxes are only collected by the federal government d) Taxes are only collected by state governments

a) taxes pay for schools first responders and roads

Why is it useful to have your bank account and routing numbers when using tax preparation software? a) to indicate where tax refunds should be sent b) to show how much interest you have earned over the year c) to use as additional forms of identification d) to show how much money you have paid in taxes

a) to indicate where tax refunds should be sent

Each year, you must file a) your federal taxes and state taxes if your state requires it b) only your federal taxes since state taxes get filed every other year c) your federal, state, county, and town taxes

a) your federal taxes and state taxes if your state requires it

Why might preparing taxes be different for people living in different states? a) everyone must file state taxes but depending on where you live, you may not need to file federal taxes b) Everyone must file federal taxes, but each state has different tax laws

b) Everyone must file federal taxes, but each state has different tax laws

Which of the following is NOT a possible tax or deduction that could be withdrawn from your paycheck? a) FICA b) Overtime pay c) federal income tax d) contributions to retirement savings

b) Overtime pay

If you have to decide to claim a credit or deduction on your taxes which should you take? a) Claim only deductions since credits are charged to you can result in big bills later b) claim all deductions and credits that you are eligible for since they both can reduce your taxes c) only claim credits since deductions reduce the amount of money in your tax refund d) claim both since they document how much in taxes you have paid

b) claim all deductions and credits that you are eligible for since they both can reduce your taxes

Your salary is one thing to consider when reviewing a job offer but benefits are also important. Which of the following would NOT be a part of your benefits package? a) Disability insurance b) free technology equipment c) paid time off d) healthcare insurance

b) free technology equipment

Tax preparation software can help prepare and file your taxes by _________. a) making an appointment with a taxpayer near you b) posing questions to collect the necessary information c) calculating your taxes based on your savings account balance d) providing you with black tax forms you can fill out

b) posing questions to collect the necessary information

Healthcare, paid time off, disability insurance, and matching contributions to a retirement account are all types of _________ available from your employer.

benefits

Your salary is one thing to consider when reviewing a job offer but benefits are also important. Which of the following would NOT be a part of your benefits package? a) matching contributions to a retirement account b) disability insurance c) FICA d) healthcare insurance

c) FICA

To file your federal and state taxes you ____________ a) can use tax preparation software for federal taxes, but can't for state taxes b) must prepare the same tax forms for both c) must prepare different forms for each type of government(if your state requires it) d) can use tax preparation software for state taxes, but can't for federal taxes

c) must prepare different forms for each type of government(if your state requires it)

Which of the following is NOT a possible tax or deduction that could be withdrawn from your paycheck? a) restaurant tax b) Federal income tax c) FICA d) contributions to retirement savings

c. restaurant tax

When preparing your taxes, what can possibly help reduce the amount of taxes that you owe? a) stock and savings interest b) sharing what you earned on a W-2 or 1099 form c) Having stock dividends d) credits and deductions

d) credits and deductions

The W-2 form is a form that tells you _______. a) how many taxes you owe to the federal government b) how many taxes to withhold from your paycheck c) how often you will be paid d) how many taxes you've been paid in the last year based on how much you've earned

d) how many taxes you've been paid in the last year based on how much you've earned

Generally, the more education you receive, the ________________ will be.

higher your lifetime earnings

The amount of money you're paid, after all taxes and deductions are taken out of your paycheck is called ________.

net pay