7. Your take home pay from your job is less than the total amount you earn. Which of the following best describes what is taken out of your total pay?
a.) Social security and Medicare contributions.
b.) Federal income tax, property tax, and Medicare and social security contributions.
c.) Federal income tax, social security and Medicare contributions. These deductions cannot be avoided. They can be altered in numerous ways. If oyu are receiving a refund every year from overpaying your taxes, you need to adjust how your deductions are withdrawn. Chances are you could use that money now. With the average tax refund hitting $2,500, this is becoming a real problem.
Visit your payroll, personnel or human resource department and ask them for a W-4. Do the best you can at estimating your deductions so the government gets only what they have coming and not a dime more.
Your 401(k) plan withdraws money before these taxes are assessed and in many instances, lowers your overall taxable income without affecting your take home pay. You may have to tweak the percentage, but you can normally save about five percent (often more) of your pre-tax income this way.
d.) Federal income tax, sales tax, and social security contribution.
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