Certified Payroll Professional Practice Exam

Form W-4 is used for what specific purpose?

1. Claim exemption from withholding

2. Summarize information returns

3. Application for Social Security Card

4. Document federal tax withholding amount

The correct answer is: Document federal tax withholding amount

Form W-4 is used by employees to indicate their withholding allowances for federal income tax purposes. By completing this form, employees provide information to their employers on how much federal income tax should be withheld from their paychecks. Therefore, the correct answer is D. Option A (Claim exemption from withholding) is incorrect because employees use Form W-4 to adjust their withholding allowances, not to claim exemption from withholding altogether. Option B (Summarize information returns) is incorrect because this task is typically done using other forms such as Form 1099. Option C (Application for Social Security Card) is incorrect because Form W-4 is not related to applying for a Social Security card; it specifically deals with federal income tax withholding.