Contractor License Practice Exam

Disable ads (and more) with a membership for a one time $2.99 payment

Prepare for the Contractor License Exam with comprehensive quizzes. Study with multiple choice questions, flashcards, and detailed explanations to ensure you're ready for success on exam day!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.

Which tax is NOT typically withheld from employee wages?

Social Security Tax
Federal Income Tax
State Income Tax
Investment Income Tax

The correct answer is: Investment Income Tax

Investment Income Tax is not typically withheld from employee wages because it is a tax applied to income generated from investments, such as dividends, interest, and capital gains. This type of income is usually reported on tax returns and taxed independently of wages. Employees do not receive regular wage payments from investments; thus, there is no payroll framework to facilitate withholding this tax like there is for Social Security Tax, Federal Income Tax, and State Income Tax. These latter taxes are directly deducted from employees' paychecks based on their earnings, with established regulations governing the withholding process to ensure compliance with tax laws.