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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.

Having taxes withheld from your paycheck means you do not need to pay any more taxes.

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True

False

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.

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.

If you are taking tax deductions for meals, car expenses, and travel, you are most likely _______.

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A small business owner

An employee of a company

A minor

A small business owner. Small business owners get to deduct a lot of expenses from their income, thus saving them money. This is one of the perks of being in business for yourself.

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.

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