CSLB Contractor's Law & Business Practice Exam

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Prepare for the CSLB Contractor's Law and Business Exam. Use flashcards and multiple choice questions, each with hints and explanations. Enhance your exam readiness!

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What is the maximum number of exemptions an employee can put on their W-4 before you have to send the form to the IRS?

5 exemptions
10 exemptions
15 exemptions
20 exemptions

The correct answer is: 10 exemptions

The correct answer is that an employee can claim a maximum of 10 exemptions on their W-4 form before the employer is required to submit the form to the IRS. When employees fill out a W-4, they are determining how much federal income tax will be withheld from their paychecks based on their exemptions. The IRS monitors the number of exemptions claimed to prevent excessive withholding allowances from being falsely claimed. If an employee claims more than the permitted number, the employer has an obligation to report this to the IRS, ensuring compliance with tax regulations. Understanding this limit is essential for both the employer's responsibility in tax compliance and the employee's financial planning regarding their deductions.