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Personal Finance Courses: Taxes

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1.
Having taxes withheld from your paycheck means you do not need to pay any more taxes.
Choose wisely. There is only one correct answer.
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.
2.
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.
3.
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.
4.
Which type of account helps you pay for medical expenses while also saving you money on taxes?
Choose wisely. There is only one correct answer.
Flexible spending account. A flexible spending account lets you set aside money from your pay, thus reducing the amount of income you will be taxed on.
5.
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.