Income and Employment

Question 1

W-4 Form

Answer 1

Employee’s tax withholding document setting forth tax withholding amounts for employer. Completed upon hiring by employee

Question 2

!-9 Form

Answer 2

Shows employee’s identification and eligibility to work in the United States. Completed by an employee on the first day of the job. The employer has 3 days to submit.

Question 3

1099 Form

Answer 3

Shows income as an independent contractor. Received by the end of taxable year. Used to file taxes

Question 4

1040

Answer 4

Tax form. Must be filed by April 15th.

Question 5

W-2 Form

Answer 5

Provides employee’s earnings and withholdings for the tax year. End of taxable year. Used to file taxes

Question 6

Federal Income Tax

Answer 6

Tax on wages, dividends, and other compensations. Fund the federal governments, programs and entitlements.

Question 7

State Income Tax

Answer 7

Tax on wages, dividends, and other compensation
Fund the state government, programs and entitlements - not every state has an income tax

Question 8

Sales Tax

Answer 8

Tax on goods and services (only state and local - no national sales tax)
Easy to collect
Tax varies state to state (not every state has a sales tax)
Fund the state government programs and entitlements

Question 9

Property Tax

Answer 9

Real Property (land and buildings)
Based on Assessed value of the house
Current tax rate is .89 per $100 of assessed value
Personal Property
Cars, boats, motorcycles
Must pay every 6 months
Property tax revenue is used to fund the schools

Question 10

Social Security Tax

Answer 10

Split with employer ½
12.4%
Cap of $128,000
Funds the government’s retirement plan
Many live only on social security payments

Question 11

Medicare Tax

Answer 11

Split with employer (employer pays ½)
Percentage withheld: 2.9%
No cap on this tax
Funds the government’s health care program for the elderly

Question 12

Excise Tax

Answer 12

Regulation of goods and services
“Sin Tax”
Alcohol, tobacco, + gasoline
Either furthers social policies (discouraging smoking) or used to fund other necessary programs (roads and highways)

Question 13

Inheritance Tax

Answer 13

Federal tax on assets worth more than $11.58 million after death. Some refer to this as the “Death Tax”. Funds federal programs

Question 14

What taxes are considered “Payroll taxes”(4 of them)

Answer 14

Social Security Taxes
Medicare
Federal Income
State Income

Question 15

Gross pay

Answer 15

The amount of money you make BEFORE tax deductions and other deductions

Question 16

Net Pay

Answer 16

The amount of money you make AFTER tax deductions and other deductions

Question 17

Withholding

Answer 17

What is taken out of your paycheck for taxes, employee sponsored health insurance and retirement.

Question 18

Standard Deduction

Answer 18

The standard deduction is a specific dollar amount that reduces the amount of income on which you’re taxed

Question 19

Itemized Deduction

Answer 19

Itemized deductions are specific types of expenses the taxpayer incurred that may reduce taxable income. Types of itemized deductions include mortgage interest, state or local income taxes, property taxes, medical or dental expenses in excess of AGI limits, or charitable donations.

Question 20

Refund

Answer 20

The amount of money received when more taxes are withheld from your paycheck than you actually owe.

Question 21

What forms of identification do you need to show when completing an I-9 form? (3 of them)

Answer 21

Passport or
Social Security Card and Driver’s License (U.S work visa)

Question 22

Why is it important for both the employee and employer to know the difference between gross pay and net pay?

Answer 22

For the employee it’s important to understand that gross pay isn’t what you take home. Net pay is what you get and you need to budget off the net pay not the gross pay.

For the employer it’s important to know the difference so they can calculate how much money each employee will receive in their paycheck. Understanding gross pay vs. net pay can allow businesses to subtract the right amount of deductions for each pay period and ensure that the employees are not under or over paid.

Question 23

Which government entity is typically responsible for assessing and collecting real property taxes?

Answer 23

Local Government

Question 24

True or False? Personal property tax is assessed on cars and Real property tax is assessed on land and houses.

Answer 24

True