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Personal Finance Courses: Taxes

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1.
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.
2.
What is the name of the United States' tax collection agency?
Choose wisely. There is only one correct answer.
The Internal Revenue Service. The Internal Revenue Service is the agency that collects taxes for the United States.
3.
Everyone will have to pay Social Security tax on all their income, no matter how much it is.
Choose wisely. There is only one correct answer.
False. The amount of earnings one must pay tax on is capped, though it usually changes every year.
4.
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.
5.
Many retirement plans are tax-deferred. This means that the earnings that build up in them are not taxed until you take them out.
Choose wisely. There is only one correct answer.
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.