Taxes & Insurance
12% of this examPayroll taxes, Florida sales tax on construction work, and the insurance program every contractor carries. Tested as a mix of memorized rates (FICA), form names (941 vs 940), and coverage-matching questions (which policy answers which loss).
Core concepts
Payroll taxes have a fixed cast
FICA: 6.2% Social Security + 1.45% Medicare = 7.65% withheld and matched by the employer. FUTA: employer-only, on the first $7,000 per employee. Form 941 reports quarterly; Form 940 is the annual FUTA return.
Lump-sum contractors pay the sales tax
On a lump-sum real property contract, the contractor is the end consumer of the materials — pays tax at purchase, charges the owner none.
Match the policy to the loss
Workers' comp: employee injuries. General liability: third-party injury/property damage. Builder's risk: the structure itself during construction. Surety bonds are not insurance — the contractor must repay the surety.
The EMR multiplies your premium
Workers' comp premium = manual premium × experience modification rate. An EMR below 1.0 is a safety record paying dividends; above 1.0 prices you out of bids.
Key facts to know cold
Where it lives in your books
The real exam is open book. Knowing which book — and which tab — answers this domain is worth as much as memorizing it.
IRS Circular E
Memorize the FICA split (6.2 + 1.45 = 7.65%, employer-matched) and which form is which: 941 quarterly, 940 annual FUTA, W-2 employees, 1099 contractors.
4 recommended tabs
Contractor's Manual
This is your home base on exam day. Learn its table of contents — most candidates lose time flipping because they never learned which chapter holds which statute.
8 recommended tabs
Lookup strategy
- · Rates and form duties: IRS Circular E. Coverage definitions: the Contractor's Manual insurance chapter.
- · Insurance questions are matching questions — eliminate by asking 'whose loss is this?'
Reading isn't learning — retrieval is.
22 questions in this domain, each with an explanation and source.