The Ultimate Federal Taxes Quiz

Estimated Completion Time
2 min
How much did the United States federal government spend in the fiscal year 2009?
$1.5 billion
$3.5 trillion
Though the United States government collected over $2.1 trillion in taxes in 2009, there was still a budget deficit of over a trillion dollars, since government spending came to over $3.5 trillion for that same year.
$5.5 trillion

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United States federal taxes are use to fund:
national defense
infrastructure
both of the above
Federal taxes are used to fund many services that benefit the citizens of the United States. They also pay for governmental regulatory activities and social welfare programs.

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Federal taxes are actually paid:
once a year
once a month
whenever you collect your salary
Your federal income tax is actually withheld from each paycheck you earn throughout the year and deposited in government accounts.

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Progressive tax rates_____with the amount of money you earn.
increase
In the case of U.S. federal taxes, citizens are taxed progressively according to how much they earn. They may be entitled to certain exemptions designed to alleviate the tax burden for those who have children, health issues and business setbacks.
decrease
change

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Tariffs are taxes that are collected on:
tea
imported goods
The first federal taxes collected from the people of the United States were tariffs on imported goods and sales tax on certain items, known as excise taxes.
stamps

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The first federal income tax was created to fund which mid-19th century war?
the Spanish American War
the French and Indian War
the Civil War
The first U.S. federal income tax was established in 1862 to fund the Civil War, but was abolished soon after the war ended. A commissioner of Internal Revenue was appointed to collect the tax.

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Which constitutional amendment established the federal income tax?
the 1st Amendment
the 3rd Amendment
the 16th Amendment
The 16th Amendment, establishing a federal income tax, was ratified by 36 states in 1913. In 1914, the Bureau of Internal Revenue issued the first personal income tax form, the 1040.

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In 1935, President Franklin Delano Roosevelt established an "old-age" insurance program called:
Social Security
To provide for U.S. citizens in their old age, President Roosevelt established the Federal Insurance Contributions Act (FICA) tax in 1935 to fund Social Security benefits.
Social Insurance
Social Response

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Automatic withholding of income from worker's paychecks began in:
1902
1942
The Victory Tax of 1942 established the first automatic withholding of income tax. Workers began to pay their taxes as they received their paycheck, which relieved the tax burden on both citizens and the federal government.
1982

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The Internal Revenue Service (IRS) divides income levels into:
tax levels
tax brackets
The tax table published by the IRS, which determines your tax bracket, delineates the amounts and percentages owed in federal taxes by each income level and each type of filer.
tax groups

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How many types of filers are there for purposes of federal income tax filing?
four
There are four types of filers for the purposes of paying federal income tax: single, married filing separately, married filing jointly or head of a household. The IRS defines your filing status as your condition on Dec. 31 of the tax year.
10
14

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Head of household filing status may apply to you if you are:
unmarried
considered unmarried
both of the above
If your spouse didn't live with you for the last six months of the year and you're filing separate tax returns, you're "considered unmarried." If you are either unmarried or "considered unmarried" and a "qualifying person" lived in your home for more than half the year, you are entitled to file as head of household. "Qualifying persons" can be children or other relatives.

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Does every American adult have to file a federal income tax return?
yes
no
You do not have to file a federal income tax return if you did not earn a minimum amount of money for your age and filing status. There is an IRS table that helps you determine if you earned the minimum required amount and therefore need to file.
sometimes

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What is the purpose of the 1040 federal income tax form?
to help you calculate how much money you earned
to help you calculate how much tax you owe
both of the above
The 1040 federal income tax form helps you calculate how much money you earned in a given year and how much tax you owe. To calculate how much tax you owe, start with your total or gross income, deduct certain expenses to get a number called your adjusted gross income (AGI) and then subtract other deductions and exemptions to get your taxable income.

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The major income category for the purposes of paying federal income tax is usually:
rental income
wages
The major income category for most Americans is usually wages or salaries. Depending on whether you are a salaried employee, independent contractor or self-employed, you will need to provide certain forms to the IRS to verify your wages.
investment income

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The only tax-exempt income is:
unemployment compensation
You are exempt from paying income tax on unemployment compensation up to $2,400 a person. You must pay income tax on all other income such as interest or dividends on stocks and CDs, profit from the sale of real estate or collectibles, alimony, pensions and trusts.
rental income
investment income

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Which deductions can you take from your gross income when calculating your adjusted gross income (AGI)?
alimony payments
The deductions you can take when calculating your adjusted gross income (AGI) include alimony payments, self-employment tax, moving expenses, certain health care costs, student loan interest and tuition.
interest income
real estate profits

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Which deductions might you take from your adjusted gross income to get your final taxable income?
standard deduction
itemized deductions
both of the above
You may choose to take a standard deduction, which is a lump sum based on your filing status or you may choose to itemize your deductions. In the second case, you will need to submit receipts to the IRS for every qualifying expense.

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The amount of income tax a business pays depends on:
how much it earns
how it's structured
both of the above
If you are a business, the amount of income tax you pay depends, of course, on how much you earn, but also on how your business is structured. Businesses may be classified as follows: sole proprietorships, partnerships, C corporations, S corporations, limited liability companies (LLC) and nonprofit organizations.

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Self-employed individuals pay_____ in addition to income tax on personal income.
personal employment tax
self-employment tax
If you are self-employed, you will have to pay self-employment tax to cover your Social Security and Medicare contributions. Since as a self-employed person you are both employee and employer, you must pay the full FICA taxes -- 15.3 percent of total income.
payroll tax

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