CFL Module 2 Exam Questions with 100%
Correct Answers.
Federal Income Tax
Tax levered by the IRS on the annual earnings of individuals, corporations, trusts and other legal
entities. They are applied on all forms of earnings that make up a taxpayer's taxable income such
as employment earnings or capital gains.
Medicare Tax
1.45% of wages and other employment compensation. The employer would contribute a
matching 1.45% for a total Medicare tax of 2.9%.
Social Security Tax
Tax levied on both employers and employees used to fund the Social Security program. Usually
collected in the form of payroll tax or self-employment tax. Pays for the retirement and disability
benefits.
FICA
Federal Insurance Contributions Act- Law requiring a deduction from paychecks and income that
goes toward the Social Security program and Medicare.
FUTA
Federal Unemployment Tax Act- The original legislation that allows the federal government to
tax businesses with employees for the purpose of collecting revenue that is allocated to state
unemployment agencies and paid to unemployment workers who can claim unemployment
insurance.
School Tax
Education Credit- A type of tax credit available to students of a post-secondary educational
institutions, claimed by those who incur qualifying expenses such as tuition and fees.
Property Tax
, The annual amount paid by a landowner to the local gov or the municipal corporation of his area.
Earned Income Tax
Levied as a percent of earned income.
SUTA
State Unemployment Tax Authority- Imposed by state/federal gov
Deductions
Amount of money taken from the gross pay at the end of a time period from taxable income.
W-4
A form completed by an employee to indicate his or her tax situation to the employer. Tells the
employer the correct amount of tax to withhold from an employee's paycheck.
Filing Status
An important factor when computing taxable income under the federal income tax in the US.
Defines the type of tax return form an individual will use.
Exemptions
When a person does not have to pay taxes on a specified amount of income for themselves and
their dependents.
Adjusted Gross Income
AGI- An individual's total gross income minus specific deductions.
Tax Credit
An amount of money that can be offset against a tax liability.
The social security tax rate is
6.20%
Employees send their payroll directly to the federal government: True or False
Correct Answers.
Federal Income Tax
Tax levered by the IRS on the annual earnings of individuals, corporations, trusts and other legal
entities. They are applied on all forms of earnings that make up a taxpayer's taxable income such
as employment earnings or capital gains.
Medicare Tax
1.45% of wages and other employment compensation. The employer would contribute a
matching 1.45% for a total Medicare tax of 2.9%.
Social Security Tax
Tax levied on both employers and employees used to fund the Social Security program. Usually
collected in the form of payroll tax or self-employment tax. Pays for the retirement and disability
benefits.
FICA
Federal Insurance Contributions Act- Law requiring a deduction from paychecks and income that
goes toward the Social Security program and Medicare.
FUTA
Federal Unemployment Tax Act- The original legislation that allows the federal government to
tax businesses with employees for the purpose of collecting revenue that is allocated to state
unemployment agencies and paid to unemployment workers who can claim unemployment
insurance.
School Tax
Education Credit- A type of tax credit available to students of a post-secondary educational
institutions, claimed by those who incur qualifying expenses such as tuition and fees.
Property Tax
, The annual amount paid by a landowner to the local gov or the municipal corporation of his area.
Earned Income Tax
Levied as a percent of earned income.
SUTA
State Unemployment Tax Authority- Imposed by state/federal gov
Deductions
Amount of money taken from the gross pay at the end of a time period from taxable income.
W-4
A form completed by an employee to indicate his or her tax situation to the employer. Tells the
employer the correct amount of tax to withhold from an employee's paycheck.
Filing Status
An important factor when computing taxable income under the federal income tax in the US.
Defines the type of tax return form an individual will use.
Exemptions
When a person does not have to pay taxes on a specified amount of income for themselves and
their dependents.
Adjusted Gross Income
AGI- An individual's total gross income minus specific deductions.
Tax Credit
An amount of money that can be offset against a tax liability.
The social security tax rate is
6.20%
Employees send their payroll directly to the federal government: True or False
