Test your knowledge

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There is one federal income tax rate that all taxpayers pay.

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True

False

False. As you earn more money, your rate increases.

Which of the following is true regarding tax credits?

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A tax credit reduces your taxable income as reported on Form 1040.

A tax credit reduces the actual tax you owe.

For most taxpayers, the standard tax credit will be larger and more valuable than itemizing your credits.

A tax credit reduces the actual tax you owe. Within limits, a dollar of credit reduces your tax by a dollar.

All other factors being equal, waiting until which age would let you receive the most Social Security benefits?

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None of these; the age does not matter

70. The longer you wait, up until age 70, the more you will receive in Social Security benefits.

What kind of retirement planning contributions can help you save money on filing your taxes currently?

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A health savings account

A traditional IRA

A Roth 401(k)

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.

Personal information you will need to prepare your tax return includes _______.

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Your former address

Your Social Security number

Your parents' names

Your Social Security number. Personal information you will need to prepare your tax return includes your Social Security number.

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