ACCT M50 PRINCIPLES OF INCOME TAXATION PRACTICE EXAM | FREE SOLVED ANSWERS
In terms of dollars, wage-earning taxpayers will normally pay the majority of their tax liability:
In terms of dollars, wage-earning taxpayers will normally pay the majority of their tax liability:
Multiple Choice
- a. When they file their tax return.
- b. Through withholding from their wages.
- c. In the following tax year.
- d. In advance in January.
Correct Answer: B (Through withholding from their wages)
The correct answer is (b) Through withholding from their wages.
Wage-earning taxpayers in many countries, including the United States, typically pay the majority of their income tax liability throughout the year through a system of withholding from their wages. Employers are generally required to withhold a portion of an employee’s earnings and remit these funds directly to the tax authorities on the employee’s behalf. This ensures that tax payments are made regularly over the tax year rather than as a single lump sum when the tax return is filed. While taxpayers may still owe or receive a refund when they file their tax return, the bulk of the tax liability is usually satisfied through these ongoing withholdings.