DECA Human Resources Management Practice Exam

What is the primary purpose of a W-4 form in the employment process?

1. To calculate overtime pay

2. To determine tax withholdings

3. To assess employee performance

4. To enroll in employee benefits

The correct answer is: To determine tax withholdings

The W-4 form is primarily used to determine tax withholdings for employees. When an employee starts a new job, they complete the W-4 to provide their employer with the necessary information regarding their tax situation. This includes details like marital status and the number of allowances or dependents they are claiming, which affects how much federal income tax should be withheld from their paycheck. By accurately completing the W-4, employees can ensure that they have the appropriate amount of taxes taken out of their earnings. This is important for preventing under-withholding, which could result in owing money at tax time, or over-withholding, which means the employee is effectively giving the government an interest-free loan throughout the year. Ultimately, the purpose of the W-4 is to help manage an employee’s tax obligations efficiently as part of the employment process.