Taxes and Your PayStub
Which of the following categories is likely to be one of the top three spending categories for the government? A) Entertainment B) National Defense C) Fashion D) Technology
National Defense
Which of the following is NOT required information on a W-4 form? A) Name and address B) Social Security number C) Earned income from previous job D) Marital status
Earned income from previous job
Which of the following spending categories is NOT mentioned as a top government spending category? A) Education B) International Affairs C) Space Exploration D) Transportation
Space Exploration
If a taxpayer wants to claim dependents, what information must they provide?
The names and Social Security numbers of the dependents.
What is the importance of filing taxes on time?
To avoid penalties and interest on unpaid taxes.
Why might an employer offer benefits like paid vacations and sick days?
To entice and retain employees
When selecting a filing status for their tax return, what must each taxpayer do to maximize their tax benefits
There are five filing statuses, and each taxpayer must select one that benefits them the most.
How does the 401(k) plan differ from the 403(b) plan?
401(k) is a retirement plan for private employees, while 403(b) is for government employees.
If a taxpayer is under 19 and lives with their parent for more than half the year, which of the following criteria must also be met for them to be considered a dependent?
They must not provide more than half of their own support.
How does the tax cycle influence when a taxpayer should file their taxes?
It establishes deadlines for filing, which can affect penalties for late submissions.
When reviewing a pay stub, which of the following deductions might be classified as a voluntary payroll deduction? A) Federal income tax B) Social Security tax C) State income tax D) Health insurance premiums
D) Health insurance premiums
What is one reason why income taxes are important for public services?
They provide funding for essential services like healthcare and education.
What is the significance of the threshold amounts ($13,850 for earned income and $1,150 for unearned income)?
They are the minimum amounts that trigger a tax obligation for dependents.
Miguel is married and wants to file taxes jointly with his spouse. What should he do regarding his W-4 form?
He should request to fill out a new W-4 to reflect his marital status.
Why is it important to complete tax returns each year?
To report previous year’s earnings and calculate taxes owed.
Which of the following is NOT typically considered a benefit or incentive offered by employers?
A) Paid vacations B) Stock options C) Personal shopping allowances D) Retirement contributions
C) Personal shopping allowances
Describe "earned income"
Money earned through employment and active work.
If a taxpayer wants to ensure they are not under-withholding taxes, which form should they review and potentially adjust?
W-4
How does the concept of "dependent" affect a taxpayer's tax obligations?
Dependents allow taxpayers to reduce their tax obligations and qualify for credits.
When determining how much you owe in taxes, what is something you should not consider?
Personal savings account balance
What is the primary purpose of income taxes collected by the government?
To provide revenue for public expenses
Why is the standard deduction important in determining taxable income?
It is subtracted from your gross pay to calculate taxable income.
If a taxpayer earns less than $13,850, what is the most appropriate action they should consider regarding filing a tax return?
They should file a return to claim any potential refunds.
What is the significance of the 1040 form in the tax filing process?
It is a summary of all income and deductions for individual taxpayers.
What is the primary purpose of the W-2 form?
To summarize wages and taxes withheld for an employee.