Certified Payroll Professional Practice Exam 2025 - Free CPP Practice Questions and Study Guide

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Question: 1 / 400

Form 1042-S is used to report income subject to withholding for which category of entities?

U.S. businesses

Individual taxpayers

Foreign persons

Form 1042-S is used to report income subject to withholding for foreign persons. This form is specifically designed for reporting income payments made to foreign individuals, companies, or entities that are subject to withholding under the Internal Revenue Code. It is essential for compliance with tax regulations and ensuring that the appropriate amount of tax is withheld on income paid to non-resident aliens and foreign entities.

The other options are not correct because:

- Form 1042-S is not used to report income subject to withholding for U.S. businesses (Option A).

- Individual taxpayers generally receive Form W-2 or Form 1099 for reporting their income and are not the primary recipients of Form 1042-S (Option B).

- Nonprofit organizations would typically not be the recipients of income subject to withholding that requires reporting on Form 1042-S (Option D).

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Nonprofit organizations

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