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Personal Finance Courses: Taxes

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1.
Only employees pay Social Security taxes on their earnings.
Choose wisely. There is only one correct answer.
False. Employers pay the same amount on behalf of their employees, according to how much the employees pay.
2.
The difference between a tax deduction and a tax credit is that _______.
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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.
3.
What type of tax increases as your income increases?
Choose wisely. There is only one correct answer.
Progressive tax. Income tax is an example of a progressive tax.
4.
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.
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.