And, in wrapping up our three-part series on taxes, The Early Show thought it would be fun to see just how much we - and you - know.
So, we approached financial author, advice columnist and blogger Carmen Wong Ulrich and she agreed to assemble what we're all calling "The Ultimate Tax Quiz" for us.
Debbye Turner Jeff Glor put their knowledge to the test on the show Saturday, and you can do the same. Test your IRS IQ!
The questions and possible answers are below. The actual answers are beneath them all. (No peeking!)
1. How many pages are in the U.S. tax code?
A) 185 pages
B) 850 pages
C) 18,500 pages
2. Who doesn't have to pay taxes?
A) Retired adults over age 65
C) Every adult must pay
D) None of the above
3. Which is the most tax-friendly state?
4. You'll get a tax credit if you buy which of the following hybrid cars?
A) Toyota Prius
B) Lexus Hybrid
C) Honda Accord Hybrid
5. What is tax freedom day?
A) A day free from sales tax
B) When you've earned enough to pay all taxes for the year
C) National day to protest high taxes
6. The bigger your tax refund, the better.
1. C: 18,500 pages. And we wonder why it's so hard to change the tax code!
2. D: None of the above! Depending on your filing status, if you've earned income, you need to pay taxes if you make over a certain amount. For example, if you're a dependent (that teen) and you make $900 in unearned income, say as a gift, or more than $5,450 in earned income a year, you need to file. If you file as single, you'll have to report your earnings and pay taxes if you make more than $8,950 a year, but if you're over 65, that number is $10,300. For married couples and heads of households, those numbers differ a bit, and if you own a small business, you have to file if you make $400 or more that year. To find out your filing and payment status, go to IRS.gov.
3. D: Alaska. According to the Tax Foundation, it's the 17th year in a row that Alaska ranks as the state with the lowest taxes per resident, including federal, state, local taxes, sales tax, fuel tax, etc. -- 6.6 percent! Alaskans don't pay income or state sales tax and get refunds due to local oil revenue.
4. C: Honda Accord. Hybrid tax credits have been phased out on brands such as Toyota and its Lexus line, but you can still claim credits for the Ford Escape hybrid ($2,600 for 2007, $3,000 for '08), Honda Accord hybrid, and Mercury hybrids. And if a few years, all tax credits will be phased out. The more hybrid cars that sell, the fewer credits will be available. Search "hybrid credits" at IRS.gov.
5. B: When you've earned enough to pay all taxes for the year. It's the day of the year, this year April 23, when we as Americans have earned enough in total to pay all of our taxes. That day fluctuates - it's three days earlier this year due to the stimulus package recently put into place and, though there is a national average, state-by-state, Tax Freedom Day differs: New Yorkers have to wait until May 5, while Texans can start "celebrating" April 12.
6. B: False. Definitely B: Getting a big tax refund check every spring should not be a goal. It just means that you've been handing over too much money to the government with every paycheck. They've been holding onto it, and now you're getting it back, without interest! Not a good savings plan. If you're getting a big refund check every year, check the number of exemptions you claimed on your W-4 at your job. If you claim no exemptions, you'll get taxed too at too high a rate and get too big a refund check. Claim more exemptions to lower your tax refund - you can ask your employer to change your W-4 anytime. But calculate carefully: Take too many exemptions, and you'll end up with a spring tax bill.