Taxes Unit Study Guide
1. What are the three largest categories of federal government spending?
Health, Military, and Interest on Debt
2. What does the term "withholding" mean in reference to your paycheck?
Withholding is the portion of an employee's wages that is not included in their paycheck but is
instead remitted directly to the federal, state, or local tax authorities.
3. When do you start paying taxes?
When you make more than the minimum income requirement
4. Why is it important to be extremely careful when completing your 1040 form?
The 1040 form determines whether you owe additional taxes or are entitled to receive a refund from
the government
5. What is the deadline to file your federal tax return?
April 15th of the following year
6. What is a W4?
Form W-4 tells you, as the employer, the employee's filing status, multiple
jobs adjustments, amount of credits, amount of other income, amount of
deductions, and any additional amount to withhold from each paycheck
7. What is an I-9?
Form I-9 to verify the identity and employment authorization of individuals hired for
employment in the United States.
8. What is a 1040?
IRS 1040 form is one of the official documents that U.S. taxpayers use to file their
annual income tax return.
9. What is a 401K?
A 401(k) plan is a company-sponsored retirement account that employees
can contribute income, while employers may match contributions.
10. What is FICA? What two funds make up FICA?
The Federal Insurance Contributions Act (FICA) is a federal law that requires employers
to withhold three different types of employment taxes from their employee’s paychecks.
These taxes include 12.4 percent of compensation in Social Security taxes and 2.9
percent of salary in Medicare taxes, totaling 15.3 percent of each paycheck.
11. What is the threshold for filing a federal income tax return?
In 2021 $12,550
12. Juanita has a part-time job that pays $12/hour and works about 50 hours every
month. Her withholdings are Social Security (6.2%), Medicare (1.45%) and
federal income tax (10%). What is her approximate net pay?
$500
13. What is a 1099?
A 1099 form is used to report non-employment income, including
dividends paid from owning a stock or income that you earned as an
independent contractor.
14. What is net pay?
The amount remaining after all withholdings are accounted for is net pay
or take-home pay.
15. What is gross pay?
Gross pay is what employees earn before taxes, benefits and other payroll deductions
are withheld from their wages.
16. What are the benefits of tax filing software?
17. What is a dependent for tax purposes?
Tax software will ask simple questions about your life and provide the tax deductions
and credits you're eligible to receive. Tax software can also eliminate extra work
because if you used the same tax software before, it can transfer relevant information
from previous returns.
18. How can you pay the IRS if you owe money on your return?
Electronic Funds Withdrawal. Pay using your bank account when you e-file your return.
Direct Pay. ..Credit or debit cards. ...Installment agreement.
19. What is a tax refund? A refund on overpayment on taxes paid vs owed to the
government.
20. What is the income threshold for business owners to file a federal income tax
return?
All businesses except partnerships must file an annual income tax return or $400.00 or
parternships
21. What self-employed jobs aren’t required to pay federal income tax?
Workers who are considered self-employed include sole proprietors, freelancers, and
independent contractors who carry on a trade or business. Individuals who are selfemployed and earn less than $400 a year (or less than $108.28 from a church) are
exempt from paying the self-employment tax.