Graded A
What is the primary purpose of paying taxes?
✔✔a) To fund public services and government programs
b) To penalize income earners
c) To reduce economic activity
d) To reward taxpayers
Which of the following is considered taxable income?
a) A personal gift
b) Life insurance proceeds
✔✔c) Wages earned from a job
d) Inherited property
What does a progressive tax system imply?
a) Everyone pays the same tax rate
✔✔b) Higher earners pay a higher tax rate
c) Lower earners pay a higher tax rate
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,d) Taxes are voluntary
Which form is used to report wages and taxes withheld for employees in the U.S.?
a) Form 1040
✔✔b) Form W-2
c) Form 1099
d) Form W-4
What is the purpose of a tax deduction?
✔✔a) To reduce taxable income
b) To increase tax owed
c) To apply penalties
d) To calculate tax refunds
What is the difference between tax credits and tax deductions?
a) Tax credits reduce taxable income; deductions lower tax owed
✔✔b) Tax credits lower tax owed directly; deductions reduce taxable income
c) Both only apply to businesses
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,d) There is no difference
Which of the following is an example of a payroll tax?
✔✔a) Social Security tax
b) Property tax
c) Capital gains tax
d) Estate tax
What is the deadline to file individual tax returns in the U.S. (without extensions)?
a) December 31
✔✔b) April 15
c) June 30
d) March 1
What type of tax is charged on the sale of goods and services?
✔✔a) Sales tax
b) Property tax
c) Income tax
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, d) Estate tax
Which of the following is a common tax advantage for homeowners?
a) Deducting sales tax
✔✔b) Deducting mortgage interest
c) Excluding all property taxes
d) Avoiding income tax
What happens if you fail to file your tax return on time?
a) The IRS will automatically waive taxes owed
b) You forfeit your right to a refund
✔✔c) You may incur penalties and interest
d) Your employer will be fined
Who is responsible for collecting federal income taxes in the United States?
a) Department of Commerce
b) State governments
✔✔c) Internal Revenue Service (IRS)
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