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Personal Finance Courses: Taxes

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1.
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.
2.
The purpose of the W-4 form that you fill out when starting a new job is to determine _______.
Choose wisely. There is only one correct answer.
How much should be withheld from your paycheck for federal income taxes. The W-4 helps you and your employer avoid overpaying or underpaying throughout the year.
3.
How do IRAs, 401k plans, health savings accounts and flexible spending accounts help lower your income taxes?
Choose wisely. There is only one correct answer.
You get to deduct the money you contribute to them from your income. When you deduct the contributions you make to them, there is less money for you to be taxed on.
4.
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.
5.
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.