Certified Payroll Professional Practice Exam

What is the purpose of Form SS-8 in terms of federal employment taxes and income tax withholding?

1. Determination of worker status

2. Annual summary and transmittal

3. Employees withholding allowance certificate

4. Foreign person's income reporting

The correct answer is: Determination of worker status

Form SS-8 is used to determine the worker's status for federal employment taxes and income tax withholding purposes. This form helps to clarify whether a worker should be classified as an employee or an independent contractor. By submitting Form SS-8, the worker and the business can receive an official determination from the IRS regarding the individual's worker status. This classification is crucial for proper tax treatment and compliance with tax laws. Option B, annual summary and transmittal, refers to Form W-3, which is used by employers to summarize and transmit Forms W-2 to the Social Security Administration. Option C, employee withholding allowance certificate, is represented by Form W-4, which employees use to inform their employers about how much federal income tax to withhold from their paychecks. Option D, foreign person's income reporting, typically involves Form 1042-S, used for reporting income paid to foreign persons, rather than Form SS-8, which focuses on determining worker status.