Economics: Chapter 8

30. List two things the federal government spends your tax dollars on that you benefit from.

1. Healthcare 2 Education

W-4

1. given to employees on their first day on the job 2. purpose is to let employers know how much to withhold from an employee's paycheck for taxes

28. Give two reasons why someone would go to a tax professional (rather than using tax filing software or using the paper forms to file their tax return.

1. they wouldn't have to do it, they'd hae someone doing it for them 2. The tax return will be done correctly (most likely)

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

April 15, or the 18th if its on the weekend

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

January 1

Deadline for filing income tax returns that have received extensions

October 15

17. Question #3 of 3: How frequently is this employee paid? a) Daily b) Every other week c) Weekly d) Monthly

c) Weekly

Benefits we receive as a result of gov spending?

1. health and retirement benefits for seniors 2. national parks maintenance 3. public school education

9. Juanita has a part-time job that pays $12/hour and works about 50 hours every month. Her withholdings are Social Security (6.2%), Medicare (1.45%) and federal income tax (10%). What is her approximate net pay? a) $120 b) $500 c) $600 d) $700

b) $500

15. Question #1 of 3. What was the net (or take-home) pay for this employee for this pay period? a) $495.00 b) $744.10 c) $2,744.10 d) $3,600

b) $744.10

11. Elaine just accepted a new job and is working with the company's HR department to fill out paperwork. Which of the following steps is she responsible for? a) Determine how much tax to withhold from her paychecks based on W-4 information b) Complete a W-4 form c) Send withholding amounts to the federal government d) Compare a W-form

b) Complete a W-4 form

19. Jessica is 16 years old and earned $1,100 through her photography side gig. Her parents can claim her as a dependent on their tax return. All of the following statements are true, EXCEPT... a) Jessica is required to file an income tax return b) Jessica should expect to receive a W-2 in January c) Jessica is required to pay a 15.3% self-employment tax d) Jessica can file her own tax return even though her parents are claiming her a dependent

b) Jessica should expect to receive a W-2 in January

24. All of the following people would be required to file a tax return, EXCEPT... a) Janet, who earned $28,200 but was paid entirely in cash b) Max, whose total income from three separate part-time jobs was $9,500 c) Isaiah, who owns his own business are generated an income of $7,000 d) Dani, who is a cafe barista and earned $13,000 is wages and $250 in tips

b) Max, whose total income from three separate part-time jobs was $9,500

4. Why is it important to be extremely careful when completing your 1040? a) Making a mistake will disqualify you from receiving future refunds b) The 1040 form determines whether you owe additional taxes or are entitled to receive a refund from the government c) Completing the 1040 incorrectly will mean the wrong amount of taxes will be withheld from your paychecks going forward d) Mistakes on your 1040 form make you ineligible for employment during the next year

b) The 1040 form determines whether you owe additional taxes or are entitled to receive a refund from the government

21. If a taxpayer fills out their W-4 in a way that does not withhold enough money to cover their tax obligations, what is the most likely outcome after they file their taxes? a) They will receive a refund b) They will owe a payment to the IRS c) they will be audited d) They will be charged with tax evasion1

b) They will owe a payment to the IRS

1. Mandatory government spending includes which of the following a) Infrastructure and science b) Social Security and Medicare c) Healthcare and military d) Education and agriculture

b) social security and medicare

7. Which of the following paycheck withholdings puts money into a retirement investment fund that you will manage? a) Social Security b) Medicare c) 401(k) contribution d) Federal income taxes

c) 401(k) contribution

23. Akshay worked at a cafe while he was a college senior in Boston, Massachusetts. After graduating in June, he moved back to his home in California and started a full-time job in September. Which of the following statements is true? a) Akshay will need to file only a federal tax return b) Akshay will need to file a federal tax return and a state tax return for Massachusetts c) Akshay will need to file a federal tax return and a state tax return for both Massachusetts and California. d) Akshay will need to file a federal tax return this year and file state returns the following year.

c) Akshay will need to file a federal tax return and a state tax return for both Massachusetts and California.

13. Which of the following statements about this W-2 form is true? a) Avia Consulting will use this W-2 to file their 1040 form b) Lily earned about $117,000 over the year based on the total of her Wages, Social Security wages, and Medicare wages c) Lily paid income taxes of $1,189.90 d) Lily works in the same city that Avia Consulting is based in

c) Lily paid income taxes of $1,189.90

8. When determining whether you NEED to file a federal tax return, each of these questions matters EXCEPT... a) How much income did you earn this year? b) What type of income did you earn this year? c) What state do you live in? d) Are you claimed as a dependent on anyone else's tax return?

c) What state do you live in?

3. When do you start paying income taxes? a) When you turn 18 b) When you get a full-time job (part-time doesn't count) c) When you make more than the minimum income requirement d) When you are notified by the IRS that you are required to pay federal income taxes

c) When you make more than the minimum income requirement

5. If your only income is salary paid by your employer, which of these statements about filing your taxes is true? a) You need to file your tax return by the end of the calendar year (12/31) b) If you're employer takes out federal income taxes through payroll withholdings, you do not need to file a tax return c) You must file your tax return by the deadline (typically April 15th of the following year) or request an extension by that date d) You do not need to pay any income taxes until April 15, so you should ask your company to wait until after that date to withhold any money

c) You must file your tax return by the deadline (typically April 15th of the following year) or request an extension by that date

22. Which of the following statements about the W-2 form is TRUE? a) A W-2 lists all the money you earned in cash over the last year b) The total wages you earned from ALL jobs you worked in the previous year appear on ONE W-2 form c) You need a separate W-2 form from EACH of your employers in order to file your taxes d) The W-2 includes information about the interest you earned from your investments

c) You need a separate W-2 form from EACH of your employers in order to file your taxes

2. What does the term "withholding" mean in reference to your paycheck? a) The amount of your paycheck that you are NOT being taxed on b) How much you are going to owe the government when you file your annual tax return c) How much you earn and includes salary, bonus and commissions d) How much is being taken out of your paycheck for things like taxes, employer sponsored health insurance, and retirement

d) How much is being taken out of your paycheck for things like taxes, employer sponsored health insurance, and retirement

10. Which of the following about this W-4 is true? a) Mr. Khan is filing as married filing jointly b) Mr. Khan is requesting an additional $50 to be withheld from his paycheck c) Mr. Khan submitted this W-4 two days after he started working at Little Company Inc. d) Mr. Khan's paycheck will have less money withheld from his paycheck since he is claiming a dependent

d) Mr. Khan's paycheck will have less money withheld from his paycheck since he is claiming a dependent

25. Marquis is starting a fast food job during his senior year of high school. He lives with his parents and they will claim him as a dependent on their taxes this year. He earns $2000. Based on how he completed his W-4, his employer withheld $200 in federal income taxes from his paychecks. What will happen if Marquis doesn't file taxes in April? a) The IRS will refund his $200 directly to him. b) The IRS will refund his $200 to his parents. c) The IRS will fine Marquis $75 or more for not filing taxes. d) Nothing will happen, but Marquis will miss out on his potential refund.

d) Nothing will happen, but Marquis will miss out on his potential refund.

18. Your friend Laila is talking to you about the benefits of tax filing websites. Which of the following is TRUE? a) Filing your taxes using a website is always free of charge b) You are guaranteed a higher refund than if you were to use a paper form or hire a professional c) If you owe money to the IRS, you receive a discount if you e-file use a tax filing website d) You can avoid the costs of having to pay a professional, though you may have to pay for e-filing online

d) You can avoid the costs of having to pay a professional, though you may have to pay for e-filing online

14. When you complete your 1040 form, if you overpaid your taxes and the government owes you money, that is called a ... a) withholding b) direct deposit c) deduction d) refund

d) refund

purpose of taxes

for services that people want and need from the gov by taking money from your paycheck

26. Briefly explain the difference between discretionary and mandatory government spending.

Discretionary spending varies with regard to who is elected/ in office. While mandatory spending is placed in law no matter the standing of the government official(s).

29. Jill is 16 years old and works at her local grocery store over the summer, earning $5,600. Is Jill legally required to file a tax return? If not, should she file anyway? Explain.

Jill makes less than the standard deduction amount, so this means she is not legally required to file a tax return, but if she doesn't file for an extension, she should file anyway to get her money back. If not, Jill will be letting the government take her money.

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

December 31

Difference between gross pay and net pay?

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

First year of the calendar year. your earning for the year begin on this date

January 1

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

January 31

What doesn't need to be on a W-4?

earned income from previous job

W-2

used to do tax returns

12. What is the name of the tax form that requires you to provide identification and proves you are eligible to work in the U.S? a) I-9 b) 1099 c) 1040 d) W-4

a) I-9

6. You are starting your first job and you are asked to complete more paperwork on your first day. Which form will determine how much money is withheld from your paycheck for taxes? a) W-4 b) W-2 c) I-9 d) 1040

a) W-4

27. What is the deadline to file your tax return, and what can you do if you know you will miss the deadline?

The deadline to file your tax return would be April 15th (or 18th depending on if the 15th falls on a weekend or not), and if you know you will miss that deadline. You can file for an extension thats deadline is October 15th.

16. Question #1 of 3: How much did this person pay towards Medicare in this pay period only? a) $5.80 b) $24.80 c) $44.50 d) $52.20

a) $5.80

20. Which of the following describes what a "dependent" is for tax purposes? a) A child or adult that you can support financially b) someone who is temporally disabled c) an adult who financially supports you d) Someone who is a full-time student under the age of 30

a) A child or adult that you can support financially