12th grade Read a paycheck and fill in a simple income-tax form worksheet

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?

   • Shown: any raise lifts more income into the 22 percent band, which must cost more than it gains
   • Shown: taxable income rises 3 percent but tax rises faster, so after-tax pay falls behind prices
   • Not shown: after-tax pay rises about 6 percent, twice the rise in prices, since the brackets rose
   • Not shown: with 2026 brackets after-tax pay rises 3.1 percent against prices' 3
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 4 percent: they rose more than the raise, so tax grew faster than income
   • About 4 percent: more than the 3 percent raise, so tax grew more slowly than income
   • About 1 percent: the 10 percent band grew by $475, and the other bands grew about as much
   • About 3 percent: they rose with prices, so the worker's tax rate stayed the same

4. 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.

5. 3.

   Jun tests Dana's claim on card C against cards A and B. What is the verdict?

   • Wrong: only $2,600 of the $5,000 is taxed at 22 percent; Dana keeps $3,757.50 after taxes
   • Right: crossing $50,400 retaxes all of Dana's income at 22 percent, so Dana loses money
   • Wrong: all $5,000 is taxed at 12 percent, so Dana keeps $4,017.50 after payroll tax
   • Right: after income tax of $1,100 and payroll tax Dana keeps only $3,517.50, a loss
6. 4.

   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: Dana keeps $1,847 after income tax alone, well over the $1,500 cost of childcare
   • No: taxes of $393 leave Dana $1,607, which is under the $1,500 cost of new childcare
   • Yes, narrowly: after $240 income tax and $153 payroll tax, Dana keeps $1,607 against $1,500
7. 5.

   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 $2,000 or less, since the 22 percent band takes most of a large offer
   • Dana keeps $5,200, since the whole $10,000 above $48,000 is taxed at 22 percent
   • Dana keeps $7,275 of $10,000, about 73 cents on the dollar, a little below 75
8. 6.

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

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

9. 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.

10. 7.

    A friend calls Worker P's $2,400 refund free money. Kira tests the claim against cards A to C. What is the verdict?

    • Not free: P gave up the full $2,400 of interest, since P lent it for a year
    • True: P earned 4.0 percent on the $2,400, since the government pays interest on refunds
    • True: the government sends P $2,400 that P did not earn, so the refund is a gift
    • Not free: it is P's own $2,400 back, and P gave up about $48 of interest
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
    • Withholding $200 extra each month raises P's tax owed for the year by $2,400
    • P could save the $200 monthly, earn about $48 and keep access, while a refund waits
    • 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?

    • $2,448 better off, the $2,400 refund plus the $48 of interest
    • About $48 better off, the interest on an average of $1,200 at 4.0 percent
    • $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 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
    • 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