Tax Basics
What are taxes?
Money paid to the government.
When is the usual deadline to file federal taxes?
April 15.
What is a deduction?
An amount that lowers taxable income.
What tax is added to many items people buy at stores?
Sales tax.
What is the money left after taxes called?
Net income.
What government agency collects federal income taxes?
The IRS
What document shows yearly earnings and taxes withheld from a job?
W-2 Form.
What is a tax credit?
An amount that directly lowers taxes owed.
What type of tax do homeowners pay on their property?
Property tax.
Why is it important to save part of your paycheck?
To prepare for emergencies and future expenses.
What form do employees fill out when starting a job for tax withholding?
W-4 Form
What does filing taxes mean?
Reporting income and taxes to the government.
Why is budgeting important when paying taxes?
It helps people prepare financially for tax payments.
What is the main purpose of taxes?
To fund government programs and services.
What can happen if someone does not pay their taxes on time?
They may receive penalties or fines.
What is a progressive tax system?
A system where higher incomes are taxed at higher rates
What is a dependent?
Someone supported financially by another person.
How can education expenses help reduce taxes?
Through education tax credits or deductions.
What is an excise tax?
A tax placed on specific goods like gasoline, tobacco, or alcohol.
What is tax evasion?
Illegally avoiding paying taxes.
What is the difference between gross pay and net pay?
Gross pay is before taxes; net pay is after taxes.
Why do people keep tax records and receipts?
For proof of income, deductions, and audits.
Why is understanding taxes important for financial literacy?
It helps people manage money, avoid penalties, and make smart financial decisions.
What is the difference between federal and state taxes?
Federal taxes go to the national government, while state taxes go to state governments for local services.
How can understanding taxes help someone become financially responsible?
It helps people budget money, avoid debt, file taxes correctly, and plan for future financial goals.