Volunteer Income Tax Assistance (VITA) Certification Practice Test

What is the total federal income tax withholding amount Teresa reported on her tax return?

1. $2,500

2. $3,342

3. $4,000

4. $2,900

The correct answer is: $3,342

To determine the total federal income tax withholding amount that Teresa reported on her tax return, it’s important to understand what tax withholding represents. Tax withholding is the amount of federal income tax that an employer withholds from an employee's paycheck and sends directly to the IRS on the employee's behalf. This amount is reported on the employee's W-2 form at the end of the year and is used to calculate the individual's total tax liability for that tax year. In this case, the correct answer reflects Teresa's total withholding as reported on her tax documents. When she prepares her tax return, the amount of federal income tax withheld is summed up and compared to her tax liability calculated using her total income and applicable deductions or credits. If Teresa's withholding is correctly reported as $3,342, this suggests that this amount was the sum listed on her W-2 form, aligning with her earnings and the income tax rates that apply to her specific situation. In this scenario, choosing the correct total withholding amount is critical for accurately filing her tax return, as it impacts the calculation of any refund or balance due. Thus, the amount of $3,342 signifies a key figure in her tax obligations for that year.