General Tax System
The Internal Revenue Service (IRS) is responsible for collecting federal taxes.
Answer: True
Explanation: The IRS enforces tax laws and collects federal taxes.
Tips received by workers are taxable income.
Answer: True
Explanation: Tips must be reported as income.
A tax deduction reduces taxable income.
Answer: True
Explanation: Deductions lower the income subject to tax.
Filing status affects tax rates.
Answer: True
Explanation: Different statuses have different brackets.
Penalties increase the longer taxes go unpaid.
Answer: True
Explanation: Penalties and interest add up over time.
All taxes in the United States are collected by state governments.
Answer: False
Explanation: Federal, state, and local governments may all collect taxes.
Scholarships are always taxable.
Answer: False
Explanation: Many scholarships used for tuition are not taxable.
A tax credit directly reduces tax owed.
Answer: True
Explanation: Credits reduce the tax bill dollar-for-dollar.
Head of household status offers tax advantages.
Answer: True
Explanation: It often provides lower tax rates.
Dependents can include qualifying relatives.
Answer: True
Explanation: Dependents are not limited to children.
A tax refund means you paid too little tax.
Answer: False
Explanation: A refund means you overpaid during the year.
Income earned overseas by U.S. citizens may be taxable
Answer: True
Explanation: U.S. citizens are taxed on worldwide income.
Tax deductions are more valuable than tax credits.
Answer: False
Explanation: Credits usually provide greater benefit.
Self-employed workers pay both sides of payroll taxes.
Answer: True
Explanation: They pay the full self-employment tax.
Tax planning can be done year-round.
Answer: True
Explanation: Planning helps manage tax liability.
Tax laws are created by Congress.
Answer: True
Explanation: Congress passes tax legislation.
Cryptocurrency earnings may be taxable.
Answer: True
Explanation: Crypto transactions can create taxable income.
A deduction guarantees a refund.
Answer: False
Explanation: Refunds depend on total tax payments.
Withholding too much tax can lead to a refund.
Answer: True
Explanation: Overpayment results in refunds.
The IRS communicates only by email.
Answer: False
Explanation: Official notices are typically mailed.
Filing a tax return is the same as paying taxes.
Answer: False
Explanation: Filing reports income; payment depends on taxes owed.
Bartered goods or services can be taxable.
Answer: True
Explanation: Fair market value must be reported.
You must keep records to claim deductions.
Answer: True
Explanation: Documentation is required.
Paper tax returns are no longer accepted.
Answer: False
Explanation: Paper filing is still allowed.
Understanding taxes helps citizens make informed financial decisions.
Answer: True
Explanation: Tax knowledge supports financial responsibility.