Tax Basics

Question 1

Which of the following is something you would not expect to see withheld from your paycheck?

Revolt · Accepted Answer

sales tax

Question 2

Many communities today are concerned with their local government’s ability to appropriately manage the taxes it collects. If a government doesn’t use all of the tax money it collects in taxes on existing expenditures, it may end up with extra money, called surplus. Which of the following could result in a county government budget in surplus?

Revolt · Accepted Answer

The government reduces public transportation costs by switching to propane-run buses without adjusting taxes.

Question 3

Below is a graph of the Murphys’ annual expenses. If the Murphys’ gross annual household income is $85,420, how much will they pay in federal taxes?

Revolt · Accepted Answer

$20,500.80

Question 4

The Murphys’ gross annual family income is $120,500. Mr. Murphy referred to the graph shown below and calculated that his family will spend $28,920 on taxes this year. What is wrong with Mr. Murphy’s calculation?

Revolt · Accepted Answer

He has calculated only federal taxes.

Question 5

Ralph’s annual expenses for the upcoming year are summarized in the chart below. Based on the information in the graph, approximately what percent of his total annual income is Ralph having withheld for taxes?

Revolt · Accepted Answer

36%

Question 6

Mauro just won $1,000,000 from the lottery! Despite his excitement in winning a tremendous amount of money, his brother (who is an accountant) warns him not to spend it all at once and hands him this tax rate schedule for single taxpayers. Taxable Income Federal Tax $0 - $7,825 10% of amount $7,825.01 - $31,850 $725.50 plus 15% of amount over $7,825 $31,850.01 - $77,100 $4,386.25 plus 25% of amount over $31,850 $77,100.01 - $160,850 $15,698.75 plus 28% of amount over $77,100 $160,850.01 - $349,700 $39,148.75 plus 33% of the amount over $160,850 $349,700.01 and up $101,469.25 plus 35% of amount over $349,700 Using this chart, a taxpayer who makes $58,000 annually (line 3) will have to pay $4,386.25 plus 25% of the difference of 58,000 and 31,850 or 4,386.25 + (0.25)(58,000-31,850) = $10,923.75. Before winning the lottery, Mauro’s annual income was $34,500. Use the chart to determine Mauro’s federal tax before winning the lottery and after winning the lottery. How much extra does he have to pay in federal taxes because he won the lottery?

Revolt · Accepted Answer

$336,100.50

Question 7

Many communities today are concerned with their local government’s ability to appropriately manage the taxes it collects. If a government doesn’t use all of the tax money it collects in taxes on existing expenditures, it may end up with extra money, called surplus. Which of the following could result in a county government budget in surplus?

Revolt · Accepted Answer

The government reduces public transportation costs by switching to propane-run buses without adjusting taxes.

Question 8

According to the graph below, what percent of the Simpsons’ annual expenses is state taxes?

Revolt · Accepted Answer

10%

Question 9

According the the chart below, what percentage of the Simpsons’ annual expenses is taxes?

Revolt · Accepted Answer

34%

Question 10

Looking at her paycheck, Rhonda notices that $30.56 was withheld from her last paycheck for state income tax while $122.25 was withheld for federal income tax. She knows that she indicated on her employment paperwork to set her state withholding at 21% of the federal withholding. What should Rhonda be thinking?

Revolt · Accepted Answer

The state withholding is too high, too much is being withheld.

Tax Basics Answers

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