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Personal Finance Courses: Taxes

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1.
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. 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.
2.
Social Security is a federal _______.
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Retirement and disability income program.
3.
Which of the following is true regarding tax credits?
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A tax credit reduces the actual tax you owe. Within limits, a dollar of credit reduces your tax by a dollar.
4.
What is the name of the United States' tax collection agency?
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The Internal Revenue Service. The Internal Revenue Service is the agency that collects taxes for the United States.
5.
The purpose of the W-4 form that you fill out when starting a new job is to determine _______.
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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.