CSLB Contractor's Law & Business Practice Exam

What is the primary focus of FUTA taxes?

1. State unemployment benefits

2. Federal unemployment benefits

3. Salaries for government workers

4. Insurance payments for workers

The correct answer is: Federal unemployment benefits

The primary focus of FUTA taxes—Federal Unemployment Tax Act taxes—is to fund federal unemployment benefits. Employers pay FUTA taxes to help provide unemployment compensation to individuals who become unemployed through no fault of their own. The funds collected through these taxes are used to support state unemployment insurance programs, ensuring that workers who have lost their jobs can receive financial assistance while they seek new employment. While state unemployment benefits are linked to this system, the specific focus of FUTA is on the federal aspect of unemployment insurance. The other options relate to different concepts; state unemployment benefits are administered at the state level and do not solely rely on FUTA funding. Salaries for government workers and insurance payments for workers do not pertain directly to the purpose of FUTA taxes, which is strictly about supporting unemployment benefits on a federal level.