Tax Basics Answers

Social Security and Personal Income tax are called Payroll taxes because _____. a.they help to balance the national payroll budget.b.they are automatically deducted from payroll.c.once paid, they are used to supplement the paychecks of people in need.d.you need to prove you have paid them before you can pick up your paycheck.

Many communities today are concerned with their local government’s ability to appropriately manage the taxes it collects. If a government spends more money on expenditures than it collects in taxes, it may end up with not enough money, called deficit. Which of the following could result in a county government budget in deficit? a.The government raises sales and property taxes without adjusting expenditures.b.The county closes a fire station, reducing expenditures, without adjusting taxes.c.The county gives all public school teachers a $2,000 raise without adjusting taxes.d.The county collects donations to build a fountain in city hall.

Which of the following statements best describes the difference between sales tax and property tax? a.Sales tax is applied to items as they are purchased while property tax is applied to items already owned.b.Sales tax is applied repeatedly while property tax is paid only once for as long as you own the item.c.Sales tax can be applied to a new speed boat while property tax cannot.d.Sales tax is strictly meant for food and consumables while property tax is meant for non-food items.

If a taxpayer does not have enough taxes withdrawn from her paychecks throughout the year to equal the total tax she is required to pay that year, she will owe the government the remaining balance. On the other hand, if the taxpayer has more money withheld for taxes than she is required to pay that year, she will receive a refund for the difference. Mary has determined that, based on her annual income of $36,000, her federal income tax for the year is $5,424. Mary gets paid on a bi-weekly basis, giving her 26 paychecks throughout the 52 week year.What is the minimum amount Mary must have withheld from each of her 26 bi-weekly paychecks in order to avoid owing the federal government at the end of the year?a.$104.30b.$208.62c.$692.31d.$1,384.62

Based on his salary, Kevin knows that he will have $336.00 withheld from his paycheck for federal income tax. He would like to have approximately $70.00 withheld for state income tax. Which of the following withholding options should he choose for state income tax? a.18% of federal income taxb.21% of federal income taxc.25% of federal income taxd.29% of federal income tax

Gift tax falls under which tax category? a. Payroll tax b. Property tax c. Purchase tax d. Wealth tax Please select the best answer from the choices provided

Which of the following is an example of a wealth tax?a.income taxb.excise taxc.estate taxd.sales tax

Curtis just received a raise at work increasing his salary by $8,500. He knows that an increase in salary will increase the amount of federal income taxes withheld from his paycheck. Which of the following statements best describes the effect his raise will have on state income tax withholdings? a. State income tax is unrelated to federal, he will see no change in his state withholding. b. Since he is having more withheld for federal, he will have less withheld for state so that he pays the same amount in the end. c. State income tax is usually a set percentage of federal income tax. With an increase in federal he will see an increase in state withholding. d. Since he is making more money, the state government will take advantage of his raise and charge him more income tax. His state withholding will increase. Please select the best answer from the choices provided

Stacy thinks her employer may not be withholding the correct amount from her paychecks for state income tax. She made arrangements to have 19% of federal income tax withheld for state income tax. On her last paycheck, the federal withholding was $163.88 and her state income tax withholding was $24.58. Which of the following statements is true? a.Stacy’s employer is withholding the correct amount for state income tax.b.Stacy’s employer is withholding too little for state income tax.c.Stacy’s employer is withholding too much for state income tax. d.Stacy’s employer should not be withholding state income tax.

Ralph’s current annual income is $32,000. Using the graph shown below, Ralph has calculated that he will have to pay a total of $9,280 in federal taxes this year. Which of the following statements is true? a. Ralph’s calculation is too high, he has only calculated state taxes. b. Ralph’s calculation is too high, his calculation includes state taxes. c. Ralph’s calculation is correct, he will have to pay $9,280 in federal taxes this year. d. Ralph’s calculation is too low, he did not include medical care in his calculation. Please select the best answer from the choices provided