Read a paycheck and fill in a simple income-tax form

Grade 12 Social Studies Worksheet - Challenge Me

Circle the best answer.

1. Read this first

   Use this

   Cards A to D on a raise, prices and tax brackets (cards A and B are real data; cards C and D are made up). Card A, "2025 brackets, single filers". Who made it: the Internal Revenue Service (irs.gov), read November 14, 2026. Table, columns Rate | Taxable income over: 10% | $0; 12% | $11,925; 22% | $48,475; 24% | $103,350. Card B, "2026 brackets, single filers". Who made it: the Internal Revenue Service (irs.gov), read November 14, 2026. Table, columns Rate | Taxable income over: 10% | $0; 12% | $12,400; 22% | $50,400; 24% | $105,700. Each rate applies only to the part of taxable income inside its band. Card C, "A worker (made up)". Who made it: written for this sheet. Summary in our words, not a quotation: In 2025 the worker's taxable income is $60,000. A 3 percent raise makes it $61,800 in 2026. Prices rise 3 percent. Card D, "A writer's claim (made up)". Who made it: written for this sheet. Summary in our words, not a quotation: Taxes rise faster than income, so a raise that only keeps up with prices leaves workers worse off after tax.

2. 1.

   Bo tests the writer's claim on card D against cards A to C. What is the best verdict?

   • Not shown: after-tax pay rises about 6 percent, twice the rise in prices, since the brackets rose
   • Shown: any raise lifts more income into the 22 percent band, which must cost more than it gains
   • Not shown: with 2026 brackets after-tax pay rises 3.1 percent against prices' 3
   • Shown: taxable income rises 3 percent but tax rises faster, so after-tax pay falls behind prices
3. 2.

   Pia compares cards A and B. By about how much did the brackets rise, and what does that do to the worker?

   • About 1 percent: the 10 percent band grew by $475, and the other bands grew about as much
   • About 4 percent: they rose more than the raise, so tax grew faster than income
   • About 3 percent: they rose with prices, so the worker's tax rate stayed the same
   • About 4 percent: more than the 3 percent raise, so tax grew more slowly than income
4. 3.

   Someone says indexing the brackets makes no difference to the worker. What is Esme's strongest objection?

   • Without indexing, the worker's tax would rise 6 percent, twice the 3 percent raise
   • Without indexing the same raise costs $202 more in tax, so pay falls behind prices
   • Indexing raises the brackets, so the government collects less from each worker, as the $8,308 here shows
   • With 2025 brackets the worker would pay less tax, since the lower bands are smaller
5. 4.

   Tala wants to test the writer's claim for workers in general. What evidence is missing?

   • The standard deduction in each year, to work out taxable income from wages paid
   • Pay, prices and tax for many workers over many years, not one worker with one raise
   • The payroll tax each worker pays, since it is also taken out of each paycheck
   • The 2027 brackets, to add one more year for the one worker described on card C

6. Use this

   Cards A to D on an overtime offer (card A is real data; cards B to D are made up). Card A, "2026 federal income tax brackets, single filers". Who made it: the Internal Revenue Service (irs.gov), read November 14, 2026. Table, columns Rate | Taxable income over: 10% | $0; 12% | $12,400; 22% | $50,400; 24% | $105,700. Note: each rate applies only to the part of taxable income inside its band. Taxable income is wages less the standard deduction, which is $16,100 for a single filer in 2026. Card B, "Payroll tax". Who made it: the Internal Revenue Service (irs.gov), read November 14, 2026. Summary in our words, not a quotation: The employee pays 7.65 percent payroll tax on wages, below the Social Security cap of $184,500. Card C, "Dana's first offer (made up)". Who made it: written for this sheet. Summary in our words, not a quotation: Dana is a single filer with taxable income of $48,000 before any overtime. The employer offers $5,000 of overtime pay for the year. Dana says: that pushes me into the 22 percent bracket, so I would lose money. Card D, "Dana's other offers (made up)". Who made it: written for this sheet. Summary in our words, not a quotation: Offer 2: $2,000 of overtime pay, with $1,500 of new childcare costs to cover the extra hours. Offer 3: $10,000 of overtime pay.

7. 5.

   Ren weighs Offer 2 on card D against its cost. Should Dana take it, and why?

   • No: the $2,000 is taxed at 22 percent, so Dana keeps less than the $1,500 cost incurred
   • Yes, narrowly: after $240 income tax and $153 payroll tax, Dana keeps $1,607 against $1,500
   • No: taxes of $393 leave Dana $1,607, which is under the $1,500 cost of new childcare
   • Yes: Dana keeps $1,847 after income tax alone, well over the $1,500 cost of childcare
8. 6.

   Luz compares Offer 3 ($10,000 of overtime) with the $5,000 offer on card C. Which statement is right?

   • Dana keeps more per dollar at $10,000, since a larger offer lowers the rate paid
   • Dana keeps $5,200, since the whole $10,000 above $48,000 is taxed at 22 percent
   • Dana keeps $2,000 or less, since the 22 percent band takes most of a large offer
   • Dana keeps $7,275 of $10,000, about 73 cents on the dollar, a little below 75
9. 7.

   Before Dana accepts overtime, Noah asks what the cards leave out. Which fact matters most?

   • Whether the Social Security cap of $184,500 applies, which is far above Dana's wages
   • Whether Dana files as a single filer, which cards A and C already assume
   • Whether the overtime is paid in cash or by check, since checks are taxed differently
   • Whether higher income would reduce credits or benefits Dana now receives

10. Use this

    Cards A to C on a tax refund (card A is in our words; cards B and C are made up). Card A, "Withholding and filing". Who made it: written for this sheet. Summary in our words, not a quotation: Employers withhold income tax from each paycheck, using the worker's Form W-4. After the year ends, the worker files a return that works out the tax actually owed. If the amount withheld is more than the tax owed, the difference comes back as a refund. Card B, "Two workers (made up)". Who made it: written for this sheet. Summary in our words, not a quotation: Worker P has $200 a month more withheld than the tax owed, so the refund in April is $2,400. Worker Q has withholding that matches the tax owed. Card C, "A savings account (made up)". Who made it: written for this sheet. Summary in our words, not a quotation: A savings account pays 4.0 percent a year. If Worker P saved the $200 a month instead, the account would hold an average of about $1,200 over the year.

11. 8.

    A friend says P's big refund is a good forced-savings plan. What is Zee's strongest objection?

    • P would earn about $480 in interest on the $200 saved monthly, more than the refund
    • P could save the $200 monthly, earn about $48 and keep access, while a refund waits
    • Withholding $200 extra each month raises P's tax owed for the year by $2,400
    • A refund is taxed as income when it arrives, so P keeps less than the $2,400
12. 9.

    P changes the W-4 and saves the $200 monthly instead. Ari compares the two plans. How much better off is P by April?

    • About $48 better off, the interest on an average of $1,200 at 4.0 percent
    • $2,448 better off, the $2,400 refund plus the $48 of interest
    • $0 better off, since the tax owed is the same and the $2,400 is kept either way
    • About $96 better off, the interest on $2,400 for the full year at 4.0 percent
13. 10.

    Milo asks what would most change the advice to P. Which missing fact matters most?

    • Whether P's employer also pays 6.2 percent of Social Security tax each paycheck
    • Whether the savings rate of 4.0 percent will be exactly the same next year
    • Whether Worker Q's refund is smaller than P's $2,400, since the two are compared
    • Whether P would really save the $200 each month, since the refund forces the saving