Questions and Answers
What are withholdings and deductions?
Expenses that are taken out of your paycheck
The tax on the purchase of goods or services is called _____________.
Consumption tax
The money you earn hourly for your time and effort at work is called your _____________.
Wages
What does the Form W-4 estimate?
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Every American who earns an income must file a _________ each year.
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When you make ____ money, you will pay _____ in taxes.
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If you work and earn money, you will have to pay taxes.
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When you buy clothes or check out at the grocery store, you will pay _____________.
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A fixed, annual rate of pay that doesn't change by working more or fewer hours is called ____.
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When someone says they need to file their taxes, they're talking about filling out a ________.
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What is the main IRS form that most Americans use to file their taxes?
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Property tax, inheritance tax, estate tax, and gift tax are all examples of __________.
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There are two general types of taxes. Taxes on the money you _________ and taxes on the money you ___________.
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When you buy specific items like cigarettes, alcohol, airline tickets, or gas, you will pay _________.
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Renting out property or selling content on a blog are examples of ______________.
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The deadline for filing your income tax return usually falls on _________.
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Which of the following is most likely to need the help of a tax professional?
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Only a few states have inheritance tax, which...
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Net income is also called your _________.
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When you pay taxes on a purchase, the seller gets to keep that money.
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You can produce ____________ by buying and selling stocks, bonds, mutual funds, and real estate.
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Those who properly fill out their Form W-4 shouldn't have too much or too little taxes withheld.
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Using online tax software or hiring a tax professional are both good options depending on your situation.
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Wealth taxes are often dependent on _________, so it's a good idea to understand the tax rules ___________.
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Government deficit spending is a good thing because it lowers the amount of taxes that need to be collected.
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Consumption tax pays for things everyone gets to enjoy, like...
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Getting a big tax refund is not necessarily a good thing.
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What is the total tax a person or business has to pay called?
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Always keep your filed taxes for at least three years in case the IRS decides to ______ your tax return.
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Giving to a non-profit organization can help lower your taxable income.
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Study Notes
Income and Taxes Overview
- Withholdings and deductions are expenses deducted from your paycheck.
- Consumption tax refers to the tax imposed on the purchase of goods and services.
- Wages represent the money earned hourly for work performed.
- Form W-4 is used to estimate tax liability based on personal circumstances.
Filing Taxes
- Filing a Federal tax return is mandatory for all Americans earning an income.
- A higher income results in a higher tax obligation.
- True statement: If you work and earn money, you must pay taxes.
- Sales tax is applied when purchasing items such as clothing or groceries.
Tax Structures
- A salary is a fixed annual pay that remains constant regardless of hours worked.
- The main IRS form for tax filing is Form 1040.
- Taxes fall into two categories: those based on earned income and those on spent income.
Special Taxes and Income Types
- Excise taxes apply to certain goods like cigarettes, alcohol, and gasoline.
- Passive income can be generated from renting property or selling content online.
- The income tax return filing deadline is typically April 15.
Professional Tax Assistance
- Self-employed individuals are more likely to require assistance from a tax professional.
Inheritance and Wealth Taxes
- Only a few states impose an inheritance tax, levied on assets received from deceased individuals.
- Net income, often referred to as take-home pay, is what remains after taxes.
- It is false that the seller retains any taxes paid on purchases.
Investment and Software
- Portfolio or investment income can be generated through stocks, bonds, and real estate.
- Accurate completion of Form W-4 ensures proper withholding tax amounts.
- Depending on individual situations, using tax software or hiring a professional can be beneficial.
Wealth Taxes and Government Spending
- Wealth tax regulations vary by location, making it essential to understand state tax laws.
- False premise: Government deficit spending reduces tax collection needs.
- Consumption taxes fund public amenities like parks, libraries, and zoos.
Tax Refunds and Documentation
- A significant tax refund isn't always advantageous, indicating over-withholding.
- Income taxes represent the total tax liability for an individual or business.
- It is prudent to retain filed taxes for at least three years for potential IRS audits.
Charitable Contributions
- Donations to non-profit organizations can reduce taxable income.
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Description
Test your knowledge on Chapter 10 of Ramsey's Personal Finance, focusing on income and taxes. This quiz explores key concepts such as withholdings, deductions, and consumption tax. Perfect for reinforcing what you've learned about managing your earnings and taxes.
