Taxes and Budgeting Practice Flashcards

A set of 32 vocabulary flashcards covering tax forms, paycheck withholdings, and personal budgeting strategies based on the lecture transcript.

Mandatory government spending includes which of the following?*

Infrastructure and science

Social Security and Medicare

 Healthcare and military

Education and agriculture

Social Security and Medicare.

What does the term "withholding" mean in reference to your paycheck?*

The amount of your paycheck that you are NOT being taxed on

How much you are going to owe the government when you file your annual tax return

How much you earn and includes salary, bonus and commissions

How much is being taken out of your paycheck for things like taxes, employer sponsored health insurance, and retirement

The amount taken out of a paycheck for taxes, employer-sponsored health insurance, and retirement.

When do you start paying income taxes?*

When you turn 18

When you get a full-time job (part-time does not count)

When you make more than the minimum income requirement

 When you are notified by the IRS that you are required to pay federal income taxes

You start paying income taxes when you make more than the minimum income requirement.

 Why is it important to be extremely careful when completing your 1040 form?*

Making a mistake will disqualify you from receiving future refunds

The 1040 form determines whether you owe additional taxes or are entitled to receive a refund from the government

 Completing the 1040 incorrectly will mean the wrong amount of taxes will be withheld from your paychecks going forward

Mistakes on your 1040 form make you ineligible for employment during the next year

The tax form that determines whether a taxpayer owes additional taxes or is entitled to receive a refund from the government.

If your only income is salary paid by your employer, which of these statements about filing your taxes is true?*

You need to file your tax return by the end of the calendar year (typically December 31st)

If your employer takes out federal income taxes through payroll withholdings, you do not need to file a tax return

You must file your tax return by the deadline (typically April 15th of the following year) or request an extension by that date

You do not need to pay any income taxes until April 15th, so you should ask your company to wait until after that date to withhold any money

You must file your tax return by the deadline (typically April 15th of the following year) or request an extension by that date

You are starting your first job and you are asked to complete some paperwork on your first day. Which form will determine how much money is withheld from your paycheck for taxes?*

W-4

W-2

I-9

1040

W-4

Which of the following paycheck withholdings puts money into a retirement investment fund that you will manage?*

Social Security

Medicare

401(k) contribution

Federal income taxes

401(k) contribution

When determining whether you NEED to file a federal tax return, each of these questions matters EXCEPT…*

How much income did you earn this year?

What type of income did you earn this year?

What state do you live in?

 Are you claimed as a dependent on anyone else's tax return?

What state do you live in?

Which of the statements about this W-4 is TRUE? *

Mr. Khan is filing as married filing jointly

Mr. Khan is requesting for an additional $50 to be withheld from his paycheck

Mr. Khan submitted this W-4 two days after he started working at Little Company Inc.

Mr. Khan’s paycheck will have less money withheld from his paycheck since he is claiming a dependent

Mr. Khan’s paycheck will have less money withheld from his paycheck since he is claiming a dependent

Elaine just accepted a new job and is working with the company’s HR department to fill out paperwork. Which of the following steps is she responsible for?*

Determine how much tax to withhold from her paychecks based on W-4 information

Complete a W-4 form

 Send withholding amounts to the federal government

Complete a W-2 form

Complete a W-2 form

 What is the name of the tax form that requires you to provide identification and proves you are eligible to work in the U.S.?*

I-9

1099

1040

W-4

I-9

Which of the following statements about this W-2 form is true?*

Avia Consulting will use this W-2 to file their 1040 form

Lily earned about $117,000 over the year based on the total of her Wages, Social Security wages, and Medicare wages

Lily paid state income taxes of $1,189.90

Lily works in the same city that Avia Consulting is based in

Lily paid state income taxes of $1,189.90

When you complete your 1040 form, if you overpaid your taxes and the government owes you money, that is called a __________.*

withholding

direct deposit

deduction

refund

refund

Question #1 of 3: What was the net (or take-home) pay for this employee for this pay period?*

$335.10

$400.00

$2,680.80

$3,200 

335.10

Your friend Laila is talking to you about the benefits of tax filing websites. Which of the following is true?*

Filing your taxes using a website is always free of charge

You are guaranteed a higher refund than if you were to use a paper form or hire a professional

If you owe money to the IRS, you receive a discount if you e-file use a tax filing website

You can avoid the costs of having to pay a professional, though you may have to pay for e-filing online

You can avoid the costs of having to pay a professional, though you may have to pay for e-filing online

Which of the following describes what a "dependent" is for tax purposes?*

A child or adult that you support financially

Someone who is temporarily disabled

An adult who financially supports you

Someone who is a full-time student under the age of 30

A child or adult that you support financially

 If a taxpayer fills out their W-4 in a way that does not withhold enough money to cover their tax obligation, what is the most likely outcome after they file their taxes?*

They will receive a refund

They will owe a payment to the IRS

They will be audited

They will be charged with tax evasion

They will owe a payment to the IRS

Which of the following statements about the W-2 form is TRUE?*

A W-2 lists all the money you earned in cash over the last year

The total wages you earned from ALL jobs you worked in the previous year appear on ONE W-2 form

You need a separate W-2 form from EACH of your employers in order to file your taxes

The W-2 includes information about the interest you earned from your investments

You need a separate W-2 form from EACH of your employers in order to file your taxes

 Which of these costs would be the MOST difficult to adjust if you were looking to reduce your expenses?*

Dining out at local restaurants

Loan payment on a new car

Expenses for new clothes

Postponing a purchase for a big-screen TV

Loan payment on a new car

Isaiah has a summer internship at a technology company and is paid $3,000. After Federal and state taxes, Social Security, and Medicare are deducted, his take-home pay is $2,500. Which of the statements below is correct?*

His gross pay is $2,500 and net pay is $3,000

His gross and net pay are $3,000

His gross and net pay are $2,500

His gross pay is $3,000 and net pay is $2,500

His gross pay is $3,000 and net pay is $2,500

You are putting together your first post-graduation budget. Your net pay is $2,500 per month and you estimate that your monthly expenses will be $2,625. Which of the following is TRUE? *

You have an extra $125 each month that you can spend on a fun or leisure activity

You can invest a portion of your monthly income into a retirement fund, as your expenses are well within your budget

You need to either cut back on your spending or find an additional source of income to balance your budget

You have room in your budget to make philanthropic donations to your favorite charity

You need to either cut back on your spending or find an additional source of income to balance your budget

All of the following are good budgeting strategies if you want to save money at the grocery store EXCEPT:*

Focusing on unit price when comparing similar products

Building a weekly meal plan around items you already own or items that are on sale that week, rather than just choosing foods you'd like to eat

Focusing only on the price when comparing similar products

Preparing a grocery list before you go to the store and avoiding buying items that aren’t on the list

Focusing only on the price when comparing similar products

Which description is most accurate for a Zero-Based Budget?*

You put every dollar of your net pay into a budget category each month

You spend your checking account balance down to $0 every month

You spend your saving account balance down to $0 every month

You pay every one of your debts down to $0 every month

You put every dollar of your net pay into a budget category each month

For two months in a row, Aaron realizes he has gone over budget by roughly $175. Which of these options makes the most sense for him to fix his problem?*

Cancel one of his streaming video subscriptions and go out to dinner three fewer times each month with friends

Start paying just the minimum monthly payment on his student loan and credit card debt, instead of the extra he's been contributing

Contribute $100 less to savings each month and $75 less to his retirement fund

Sell his current car and get a less expensive vehicle

Cancel one of his streaming video subscriptions and go out to dinner three fewer times each month with friends

You're considering moving into a 3 bedroom apartment with 2 roommates, rather than living on your own post-college. Which of your expenses would likely decrease by having roommates?*

Groceries and eating out

Rent

Cell phone bill

Bedroom furniture

Rent

Which one of these expenses most likely represents a VARIABLE cost in someone's budget?*

Electricity bill

Rent

Car insurance premium

Student loan payment

Electricity bill

What action corresponds to the advice "Pay yourself first?"*

Wait until the end of the month to determine how much you have leftover to save

Set aside a fraction of your paycheck into a savings account before you start spending

Spend your regular paycheck on needs and wants but funnel any extra money into saving

Become self-employed so you're paying yourself instead of being paid by an employer

Set aside a fraction of your paycheck into a savings account before you start spending

Which of the following is TRUE about a lease agreement?*

A lease is an agreement between you and your roommates that you submit to the apartment owner.

You never have to pay any fees when you sign a lease. If you do, that means it is a scam.

A lease often has information about your prior housing experience; it's a record that the apartment owner can use to see if you are a good candidate

A lease is an agreement that includes details about rent, apartment policies, vacating, etc.

A lease is an agreement that includes details about rent, apartment policies, vacating, etc.

One way the grocery store tricks you into spending more money than you budgeted for is...*

Being open early in the morning and late at night

Paying their cashiers and baggers more

Putting high priced items at eye level and lower cost items above or below eye level

Accepting digital and print coupons

Putting high priced items at eye level and lower cost items above or below eye level

Janine is considering what auto costs she is going to have after buying a new car. She has budgeted enough money for the monthly auto loan payment, gas, and auto insurance. Has Janine factored in all of the costs associated with car ownership?*

Yes, these are the three costs she should expect to pay once she is a car owner

No, she does not need to include the cost of auto insurance as it is included in her auto loan payment.

No, she needs to factor in other costs such as maintenance, emergency repairs, etc.

No, she does not need to include the cost of gas as it is covered under her auto insurance policy

No, she needs to factor in other costs such as maintenance, emergency repairs, etc.

Which statement accurately describes how the 50/20/30 Rule would break down your take-home pay?*

50% on wants, 20% on saving, and 30% on needs

50% on saving, 20% on needs, and 30% on wants

50% needs, 20% on saving, and 30% on wants

50% on saving, 20% on wants, and 30% on needs

50% needs, 20% on saving, and 30% on wants

A good rule of thumb when budgeting for a home is to expect to make a _______ down payment.*

5%

10%

20%

35%

20%