Which tax is the contractor responsible for paying entirely without any employee contribution?
Correct Answer
D) Federal unemployment tax (FUTA)
FUTA (Federal Unemployment Tax) is paid entirely by the employer at 6.0% on the first $7,000 of each employee's wages, with no employee contribution required.
Why This Is the Correct Answer
FUTA (Federal Unemployment Tax Act) is paid entirely by the employer with zero employee contribution. Contractors must pay 6.0% on the first $7,000 of each employee's annual wages. This tax funds unemployment benefits and is solely an employer responsibility, unlike other payroll taxes that are shared between employer and employee.
Why the Other Options Are Wrong
Option B: Medicare tax
Medicare tax is split equally between employer and employee, with each paying 1.45% on all wages. Like Social Security, this is a shared responsibility, not solely the contractor's obligation.
Option C: Federal income tax
Federal income tax is withheld from employee paychecks and remitted by the employer, but the tax burden belongs to the employee. The contractor acts as a collection agent, not the taxpayer responsible for paying this tax.
Memory Technique
Remember 'FUTA = Fully Undertaken by The Employer' - it's the only major payroll tax paid 100% by the employer with no employee contribution required.
More NASCLA Questions
Which AIA document contains the general conditions that govern the rights and responsibilities of all parties in a construction contract?
A construction company has direct labor costs of $85,000, direct materials of $120,000, and overhead costs of $45,000 for a project. What is the total job cost?
What is the primary purpose of job cost accounting in construction?
A construction company has current assets of $350,000 and current liabilities of $280,000. What is the company's working capital?
In CSI MasterFormat, which division covers earthwork and site preparation?
In a mechanical drawing, what does 'CFM' typically measure?
In CSI MasterFormat Division 08, which of the following would typically be included?
On a mechanical plan, what does the symbol 'RTU' typically indicate?
What is the minimum preheat temperature for welding ASTM A992 steel when the ambient temperature is 15°F?
A general contractor's balance sheet shows total assets of $850,000, current liabilities of $320,000, and long-term debt of $180,000. What is the company's equity?
People Also Study
Business & Financial Management
120 questions · 70% to pass
Contract Administration
60 questions · 70% to pass
Project Management
60 questions · 70% to pass