Personal Finance Courses: Taxes

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1.
Social Security is a federal _______.
Choose wisely. There is only one correct answer.
Retirement and disability income program.
2.
What kind of retirement planning contributions can help you save money on filing your taxes currently?
Choose wisely. There is only one correct answer.
A traditional IRA. Contributions to a traditional IRA can help you save money on filing your taxes currently. Roth 401(k)s cannot, and health savings accounts are not retirement plans.
3.
The federal tax rate you pay will vary depending on your age.
Choose wisely. There is only one correct answer.
False. It varies depending on your filing status.
4.
Having taxes withheld from your paycheck means you do not need to pay any more taxes.
Choose wisely. There is only one correct answer.
False. The taxes that are withheld from your paycheck are estimates of how much tax you must pay. Once you have filled out your tax return and determined the actual amount you owe, you will find that you owe more money or that you will get some money back.
5.
The difference between a tax deduction and a tax credit is that _______.
Choose wisely. There is only one correct answer.
A tax deduction reduces your taxable income, and a tax credit reduces your actual tax. When you do the math, you will find that tax credits get you more money back than tax deductions do.