Understanding Financial Deductions
A Grade 12 math worksheet on financial deductions, covering income tax, payroll deductions, and their impact on net income.
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Understanding Financial Deductions
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Date:
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Read each question carefully and provide accurate answers based on your understanding of financial deductions. Show all your work where applicable.
1. What is the primary purpose of payroll deductions?
To increase an employee's gross income.
To reduce an employee's net income.
To fund government programs and employee benefits.
To calculate an employee's hourly wage.
2. Which of the following is NOT typically considered a mandatory payroll deduction?
Federal Income Tax
Social Security Tax
401(k) Contributions
Medicare Tax
3. The amount of money an employee earns before any deductions are taken out is called their income.
4. income is the amount an employee receives after all deductions have been subtracted from their gross pay.
5. A common voluntary deduction is contributions to a plan, which helps save for retirement.
6. Explain the difference between progressive, regressive, and proportional tax systems. Provide an example of a deduction that can reduce an individual's taxable income.
7. All deductions from an employee's paycheck are mandatory by law.
True
False
8. A tax credit directly reduces the amount of tax owed, dollar for dollar.
True
False
9. Sarah earns a gross annual salary of $60,000. Her mandatory deductions include 6.2% for Social Security, 1.45% for Medicare, and 15% for federal income tax. She also contributes 5% of her gross income to her 401(k) plan. Calculate Sarah's net monthly income.
Match the term on the left with its definition on the right.
10. Gross Pay
a. Money remaining after all deductions.
11. Net Pay
b. Money earned before deductions.
12. Taxable Income
c. Income subject to taxation after exemptions and deductions.
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