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 answer 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.
34 questions in this domain, each with an explanation and source.