01
True or false
1 point
True or false: Federal income tax withheld from an employee’s paychecks is a prepayment, not the final calculation of that person’s annual tax.
Free Practice Quiz Question List
09 Taxes and Personal Finance Online Quiz Questions
Use this free practice quiz with 20 questions to review 09 Taxes and Personal Finance, test your knowledge, and prepare for your next test or exam.
20 questions
02
Choose one
1 point
Which tax form commonly reports an employee’s wages and the amounts withheld by an employer?
- A
Form 1098
- B
Form W-2
- C
Form 1040-SR
- D
Form W-4
03
Fill in the blank
1 point
FICA payroll taxes include and .
04
Choose one
1 point
A taxpayer receives an extension to file a federal income tax return. Which statement best describes what the extension generally does?
- A
It postpones both filing and payment deadlines in every case.
- B
It removes any tax balance that would otherwise be due.
- C
It generally gives more time to file, but not more time to pay tax owed.
- D
It applies automatically to state and local returns as well.
05
True or false
1 point
True or false: Receiving a large tax refund often means the taxpayer paid more during the year than was necessary, rather than receiving a bonus.
- A
True
- B
False
06
Written response
1 point
What is the standard form, not the senior variant, that many individuals file to report income, claim eligible deductions and credits, and reconcile tax payments?
07
Choose all
1 point
A freelancer is organizing records for a tax return. Select all sound recordkeeping practices.
- A
Compare received tax forms with personal records.
- B
Keep receipts and account records that support business income and expenses.
- C
Ignore income if no tax form was issued for it.
- D
Keep records of income even when no form was issued.
08
Written response
1 point
A taxpayer’s final federal tax is $3,000, and $3,400 was withheld or paid in estimated taxes. What amount is generally refunded? Enter the exact amount in dollars as a number, without a currency symbol.
09
Choose one
1 point
A taxpayer’s taxable income extends into a higher federal tax bracket. Under the progressive tax system described, how is the higher bracket rate applied?
- A
All taxable income is taxed at the highest rate the taxpayer reaches.
- B
The effective rate always equals the marginal rate.
- C
Only the portion of taxable income in a bracket is taxed at that bracket’s rate.
- D
Moving to a higher bracket makes the tax rate on earlier income rise as well.
10
Fill in the blank
1 point
A deduction reduces , while a tax credit reduces directly.
11
Choose all
1 point
Select all statements that accurately describe the general tax treatment of traditional and Roth retirement contributions and withdrawals.
- A
Traditional contributions may be deductible or made before income tax, and withdrawals are generally taxable.
- B
Roth contributions are generally deductible, and all withdrawals are taxable.
- C
Roth contributions are generally made with after-tax income, and qualified withdrawals may be tax-free.
- D
Traditional and Roth accounts always have identical tax treatment.
12
Choose one
1 point
An investor is considering selling an investment that has risen in value. Which approach best reflects tax-aware decision-making?
- A
An unrealized gain is always taxed immediately, even if the investment is not sold.
- B
Selling may create a taxable gain or loss, so tax impact should be weighed alongside other investment factors.
- C
Investors should sell any investment as soon as it has a gain to avoid taxes.
- D
Investment tax treatment is always the same regardless of investment type or holding period.
13
Open ended
1 point
A taxpayer expects to owe federal income tax but cannot complete the return by the regular filing deadline. Explain what an extension generally changes, what it does not change, and when the taxpayer should pay the expected balance.
14
Choose one
1 point
An employee sees FICA withheld from their wages. Which taxes does this withholding generally represent?
- A
Federal income tax and sales tax
- B
Social Security and Medicare taxes
- C
Property tax and excise tax
- D
State and local income taxes
15
Choose one
1 point
A new employee wants their employer to use relevant information when calculating federal income tax withheld from each paycheck. Which form should the employee complete?
- A
Complete Form 1040 to claim a refund before filing a return
- B
Complete Form 1099 to report investment gains directly to the employer
- C
Complete Form W-4, which provides information used to calculate federal income tax withholding
- D
Complete Form 1040 to determine the employee's final annual tax
16
Choose one
1 point
When estimating federal taxable income, which approach best reflects the general calculation described in the material?
- A
Subtract permitted adjustments and deductions from income that is taxable under the law
- B
Subtract tax credits directly from gross income
- C
Add all income, including income excluded by law, and make no adjustments
- D
Subtract withholding from wages before deciding what income is taxable
17
Choose one
1 point
An investor sells an investment for more than its tax basis. Which statement best describes a possible tax consequence?
- A
The investment's purchase price becomes a tax credit
- B
The gain is tax-free because it came from an investment
- C
The gain is taxable only if the investor received a tax form
- D
The sale can create a realized gain that may be taxable
18
True or false
1 point
True or false: If a taxpayer receives a tax form, that form necessarily lists every item of income the taxpayer needs to report.
- A
True
- B
False
19
Written response
1 point
What is the term for the income tax rate that applies to a taxpayer's next taxable dollar?
20
Written response
1 point
A taxpayer's final federal tax is $3,000, and total withholding and estimated payments are $3,400. Assuming no other adjustments, how many dollars is the overpayment that is generally refunded?