Paying Your Taxes Math Quiz

1. You earned $96,000 last year. Your effective tax rate is; Federal: 16.3, FICA: 7.65, state: 4.5. If you have added them all and subtracted them from your gross income, what would be left of your income from last year?

$27,198

$68,688

$15,369

$48,245

To calculate the income left after deducting taxes, we need to subtract the total tax amount from the gross income. The total tax amount can be found by multiplying the effective tax rates with the gross income.

Federal tax = 16.3% of $96,000 = $15,648
FICA tax = 7.65% of $96,000 = $7,344
State tax = 4.5% of $96,000 = $4,320

Total tax = $15,648 + $7,344 + $4,320 = $27,312

Income left = Gross income - Total tax = $96,000 - $27,312 = $68,688

Therefore, the correct answer is $68,688.

Explanation

To calculate the income left after deducting taxes, we need to subtract the total tax amount from the gross income. The total tax amount can be found by multiplying the effective tax rates with the gross income.

Federal tax = 16.3% of $96,000 = $15,648
FICA tax = 7.65% of $96,000 = $7,344
State tax = 4.5% of $96,000 = $4,320

Total tax = $15,648 + $7,344 + $4,320 = $27,312

Income left = Gross income - Total tax = $96,000 - $27,312 = $68,688

Therefore, the correct answer is $68,688.

2. You earn an amount of $22,000. The tax table says you owe $3,456 in taxes. During the year, your tax withholdings were $5,333. What is the refund amount?

$22,000

$1,877

$5,333

$3,456

The refund amount is $1,877. This can be calculated by subtracting the tax withholdings ($5,333) from the amount of taxes owed ($3,456). Since the tax withholdings were more than the taxes owed, the excess amount is refunded to the taxpayer. In this case, the refund amount is $1,877.

Explanation

The refund amount is $1,877. This can be calculated by subtracting the tax withholdings ($5,333) from the amount of taxes owed ($3,456). Since the tax withholdings were more than the taxes owed, the excess amount is refunded to the taxpayer. In this case, the refund amount is $1,877.

3. You are told that the credit score of yours, i.e. 650, is far better than 40% of the population. Also, you neighbor has a credit score, then which of the following is true?

His score is better than 40% of the population.

His score is better than 30% of the population.

His score is better than 50% of the population.

His score is better than 10% of the population.

If the credit score of the person is better than 40% of the population and the person's neighbor has a credit score, it means that the neighbor's score is worse than the person's score. Therefore, the neighbor's score must be better than the remaining 60% of the population. Since the neighbor's score is better than the remaining 60% of the population, it implies that his score is better than 30% of the population (60% divided by 2).

Explanation

If the credit score of the person is better than 40% of the population and the person's neighbor has a credit score, it means that the neighbor's score is worse than the person's score. Therefore, the neighbor's score must be better than the remaining 60% of the population. Since the neighbor's score is better than the remaining 60% of the population, it implies that his score is better than 30% of the population (60% divided by 2).

4. You found that every month you make a loan payment on time, your credit score goes up by 3 points. How much time will it take if you wish to raise it from 640 to 700?

12 months

20 months

180 months

3 months

If every month you make a loan payment on time, and your credit score goes up by 3 points, then to raise your credit score from 640 to 700, you would need to increase it by 60 points. Since each payment increases the score by 3 points, it would take 20 months (60 divided by 3) to increase the score by 60 points. Therefore, the correct answer is 20 months.

Explanation

If every month you make a loan payment on time, and your credit score goes up by 3 points, then to raise your credit score from 640 to 700, you would need to increase it by 60 points. Since each payment increases the score by 3 points, it would take 20 months (60 divided by 3) to increase the score by 60 points. Therefore, the correct answer is 20 months.

5. You receive three credit scores: 680, 695, 705. What is the average credit score?

693

695

700

690

The average credit score can be calculated by adding up all the scores and dividing by the number of scores. In this case, the sum of the three credit scores is 680 + 695 + 705 = 2080. Dividing this sum by 3 (the number of scores) gives us an average of 693.

Explanation

The average credit score can be calculated by adding up all the scores and dividing by the number of scores. In this case, the sum of the three credit scores is 680 + 695 + 705 = 2080. Dividing this sum by 3 (the number of scores) gives us an average of 693.

6. Your income is $42,000, and you had medical expenses of $567. You discovered you can deduct medical expenses over 6% of your income. What portion of your medical expenses can you deduct?

$56

$0

$60

$30

Since the deduction for medical expenses is only applicable for expenses that exceed 6% of your income, and in this case, 6% of $42,000 is $2,520, which is higher than the medical expenses of $567, you cannot deduct any portion of your medical expenses. Therefore, the correct answer is $0.

Explanation

Since the deduction for medical expenses is only applicable for expenses that exceed 6% of your income, and in this case, 6% of $42,000 is $2,520, which is higher than the medical expenses of $567, you cannot deduct any portion of your medical expenses. Therefore, the correct answer is $0.

7. You earned $88,000 last year. You invested $4,500 in an IRA and $2,400 in a 401k. You will be deducted the total from your Federal Income taxes. What did you save just in Federal Income Taxes when you are in a tax bracket that pays 25% of your income in Federal Income Taxes per year?

$1,825

$2,025

$2,235

$1,725

To calculate the amount saved in Federal Income Taxes, we need to find 25% of the total amount invested in IRA and 401k. The total amount invested is $4,500 + $2,400 = $6,900. 25% of $6,900 is $1,725. Therefore, the correct answer is $1,725.

Explanation

To calculate the amount saved in Federal Income Taxes, we need to find 25% of the total amount invested in IRA and 401k. The total amount invested is $4,500 + $2,400 = $6,900. 25% of $6,900 is $1,725. Therefore, the correct answer is $1,725.

8. You earned $34,000, and your total tax due was $6,200. What was your average tax rate?

18%

8%

5%

20%

The average tax rate is calculated by dividing the total tax paid ($6,200) by the total income earned ($34,000) and then multiplying by 100 to get the percentage. In this case, the calculation would be (6,200 / 34,000) * 100 = 18.23%. Since the question asks for the answer in whole numbers, the average tax rate would be rounded down to 18%.

Explanation

The average tax rate is calculated by dividing the total tax paid ($6,200) by the total income earned ($34,000) and then multiplying by 100 to get the percentage. In this case, the calculation would be (6,200 / 34,000) * 100 = 18.23%. Since the question asks for the answer in whole numbers, the average tax rate would be rounded down to 18%.

9. A bank tells you that increasing your credit score by 50 points will reduce your interest rate on your $10,000 car loan by 1 percent. How much you can save in the first year.

$1

$10

$100

$1,000

Increasing your credit score by 50 points will reduce the interest rate on your $10,000 car loan by 1 percent. This means that instead of paying the original interest rate on the loan, you will now be paying a lower interest rate. The amount you can save in the first year would be equal to 1 percent of the loan amount, which is $10,000. Therefore, the correct answer is $100.

Explanation

Increasing your credit score by 50 points will reduce the interest rate on your $10,000 car loan by 1 percent. This means that instead of paying the original interest rate on the loan, you will now be paying a lower interest rate. The amount you can save in the first year would be equal to 1 percent of the loan amount, which is $10,000. Therefore, the correct answer is $100.

10. You are not paying federal taxes up to $9,525, 12% for income from $9,526 up to $38,700, 22% for income from $38,701 up to $82,500. If your income is $57,890, how much taxes do you need to pay in the end?

$9,201

$12,741

$6,855

$7,723

To calculate the taxes, we need to determine the income within each tax bracket. The income falls within the 12% tax bracket, so we calculate 12% of the income from $9,526 to $38,700, which is $3,870. Next, we calculate the income within the 22% tax bracket, which is $19,190 ($57,890 - $38,700). We calculate 22% of $19,190, which is $4,222. Adding the taxes from both brackets, we get a total of $8,092. However, since the income is less than $82,500, we subtract the amount not taxed from the total, which is $369 ($82,500 - $57,890). The final amount of taxes to be paid is $8,092 - $369 = $7,723.

Explanation

To calculate the taxes, we need to determine the income within each tax bracket. The income falls within the 12% tax bracket, so we calculate 12% of the income from $9,526 to $38,700, which is $3,870. Next, we calculate the income within the 22% tax bracket, which is $19,190 ($57,890 - $38,700). We calculate 22% of $19,190, which is $4,222. Adding the taxes from both brackets, we get a total of $8,092. However, since the income is less than $82,500, we subtract the amount not taxed from the total, which is $369 ($82,500 - $57,890). The final amount of taxes to be paid is $8,092 - $369 = $7,723.