Florida General Contractor Practice Exam

Which of the following is NOT included in the taxable wages subject to Federal Unemployment Tax (FUTA)?

1. Payments to independent contractors

2. Cash bonuses

3. Medical benefits

4. Salaries and wages

The correct answer is: Medical benefits

The correct answer identifies medical benefits as not included in the taxable wages subject to Federal Unemployment Tax (FUTA). This is because FUTA is designed to fund unemployment benefits and applies primarily to wages paid to employees. Medical benefits, while a significant part of employee compensation, are categorized as fringe benefits and are not considered direct wages. Consequently, they do not factor into the calculations for FUTA. In contrast, payments to independent contractors, cash bonuses, and salaries and wages are all included in the taxable wage calculations for FUTA. Independent contractors are often treated differently for tax purposes and their payments can contribute to a different type of tax, while cash bonuses and regular salaries are direct forms of employee compensation that clearly fall under the FUTA wages category.