Utah Contractor Practice Exam

When is an employee required to complete a new IRS form for W-4?

1. After a change in age

2. Only if fewer than 5 exemptions were claimed

3. After a change in address or phone number

4. After a change in marital status

The correct answer is: After a change in marital status

An employee is required to complete a new IRS Form W-4 after a change in marital status because this can significantly impact the amount of federal income tax withheld from their pay. Marital status affects tax rates and eligibility for certain tax credits or deductions, which are reflected in the way an employee fills out their W-4. The form allows employees to indicate their filing status (e.g., single, married) and to claim exemptions or deductions, which are crucial for determining the appropriate withholding amount. Changes in other factors, such as age, address, or phone number, may not necessitate a new W-4 because they do not directly affect the tax withholding calculations in the same way that marital status does. For instance, a change in age might affect eligibility for certain tax credits but does not inherently alter the withholding amount. Similarly, updating contact information does not impact tax status or exemptions. Therefore, completing a new W-4 is primarily tied to changes that affect tax liability, such as a change in marital status.