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Many retirement plans are tax-deferred. This means that the earnings that build up in them are not taxed until you take them out.

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True

False

True. To be tax-deferred means that taxes are not levied until sometime later; in the case of retirement plans, that means when you finally take the money out.

Only employees pay Social Security taxes on their earnings.

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True

False

False. Employers pay the same amount on behalf of their employees, according to how much the employees pay.

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.

Several different tax forms that get sent to you will list the income you received during the year. Which of the following does NOT list income that you received?

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W-4

W-2

1099

All of the above list income received

W-4. Your W-4 does not list income you received. But your W-2s and any 1099s you receive will.

The various income tax filing statuses include _______.

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Married filing separately

Head of household

Single

All of the above

All of the above. There are several statuses that determine your rate.

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