EL5732 Assignment 5: Taxes and Credit

Assignment 5
(20 points)
Assignment 5: Taxes and Credit
Instructions

Save this file in your course folder, and name it with Assignment, the section number, and your first initial and last name. For example, Jessie Robinson's assignment for Section 1 would be named Assignment1JRobinson.

Type the answers to the assignment questions below. Use complete sentences unless the question says otherwise. You will have more than one day to complete an assignment. At the end of each day, be sure to save your progress.

Review Lesson 4 of the Course Overview for instructions about turning in your assignments.

Assignment Questions

In Section 5, you learned about taxes and credit. Now, you'll apply what you learned.

TIP: If you want, you can practice filling out the 1040EZ tax form in your course folder, but don't turn the tax form in to your instructor. The information on that form is personal and should be kept private.

1. How does payroll withholding help a company's employees? (1-2 sentences. 2.0 points)
Payroll withholding is when a company sets aside part of a companys paycheck for certain purposes such as taxes or retirement.

2. List at least three types of tax that a company may have to withhold from employees' paychecks. (1-3 sentences. 3.0 points)
Social security, medicare, and income taxes are all types of taxes companys can withhold from employees paychecks.

3. What are the two main types of tax forms a company provides to employees so the employees can fill out their 1040 tax form? (1-2 sentences. 2.0 points)
A w-2 or a 1099 tax form.

4. List at least two tips for using credit wisely. (1-2 sentences. 2.0 points)
Use your credit card regularly, but not for more money than you have, and pay all biills on time.

5. Why is a bank more likely to offer you credit if you have a co-signer with good credit? (1-4 sentences. 3.0 points)
Because they know that the person helping you wouldn't want their credit affected by your bad choices and are responsible so they are more likely to make sure your bills are paid on time.

6. Describe at least three things a bank would consider about you when deciding whether to give you a loan. (1-3 sentences. 3.0 points)
Your credit score/ history, the collateral or assests, and your personal income are all things banks consider when deciding to give you a loan or not.

7. Write at least two policies that a company could use to decide which customers to offer credit to. (1-2 sentences. 2.0 points)
They will look at your cash flow. Businesses may offer credit to customers to encourage them to buy goods, but want to make sure they have enough money to actually pay it back, which is installment credit. if they pay it back immedietley it is non-instalment credit.

8. Which type of credit requires that borrowers carefully manage the debt so it doesn't get out of control? Explain why this type of credit requires more careful management. (1-5 sentences. 3.0 points) Revolving credit requires more management because there isn't a set date fo the debt to be paid off so it can get out of control quickly.