PAYCHECK BASICS
What is the money you earn before taxes are taken out called?
Gross Income
Which form determines withholding when you start a job?
W-4
What type of spending includes Social Security?
Mandatory spending
What is withholding?
Money taken from paycheck for taxes
What is a dependent?
Someone you financially support
What is the money you take home after taxes called?
Net Income
Which form shows yearly earnings and taxes paid?
W-2
How are federal taxes structured?
Tax brackets
What is a refund?
Money returned if you overpaid taxes
Do part-time workers pay taxes?
yes
What are “deductions” on a paycheck?
Money Taken out for taxes, insurance, retirement, etc.
Which form do you file taxes with?
1040
When do you start paying income taxes?
When income passes a certain threshold
What happens if too little is withheld?
You owe money
What deduction helps with retirement savings?
401(k)
Why is net income lower than gross income?
Because taxes and other deductions are taken out
What happens if you fill out your W-4 incorrectly?
Too much or too little tax is withheld
What do taxes fund?
Government programs/services
What does your W-4 affect?
How much tax is taken out
Name one factor that determines if you must file taxes
Income, dependency status, type of income
Name TWO examples of paycheck deductions
Taxes, Social Security, Medicare, insurance, 401(k)
Explain the difference between a W-2 and a 1040
W-2 shows income earned; 1040 is used to file taxes
Why is the tax bracket system considered “fair”?
People are taxed based on income (higher earners pay more)
Explain why someone might get a refund
They paid more in taxes than they owed throughout the year
Why is it important to file taxes correctly?
To avoid owing money, penalties, or missing a refund