Self Employment Tax in Berkeley, California

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In Berkeley, California, there are specific taxes that are enforced on employees, which are deducted from their paychecks. The typically well-known employment taxes are the Medicare and Social Security tax, for which a small percentage of every employee's paycheck is deducted.

It's critical to note that if you are self-employed, you're still responsible for those taxes, and it's your responsibility to figure out what you owe.

In most cases, employers make all the necessary calculations to determine how much needs to be deducted from an employee's check to pay these taxes. It's typically very simple, and any decent payroll software can automate this process. But the self-employed are liable for figuring this out for themselves, or hiring an accountant to do it.

Self-Employment tax obligations in Berkeley, California

If you mainly work as an independent contractor, or are the owner of a sole proprietorship, you have to pay what's usually referred to as the "self-employment tax," if your annual income from self-employment is over $400.

Workers who are employed by someone else enjoy at least one perk that the self-employed do not: their employer matches their Social Security and Medicare contributions, essentially doubling the amount of money that's contributed to these funds on the employee's behalf.

But, the self-employed in Berkeley, California are responsible for making the employer AND employee contributions to those programs, essentially doubling what they would have to pay if they were employed by someone else.

Self-employed workers in Berkeley, California pay a self-employment tax rate of 15.3% of their income that's derived from self-employment. But, half of whatever they end up paying in self-employment tax is deductible from income tax. This essentially creates a tax deduction of nearly 8% of one's income, requiring you to only pay taxes on 92% of what you earn. Further tax deductions may lower that number further. When this deduction is taken into account, the self-employment tax rate is effectively 14%, as opposed to over 15%.

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Can a Berkeley, California Tax Attorney Help?

If you work for yourself in Berkeley, you have to stay on top of your self-employment taxes, to avoid facing significant legal and financial issues later on. This means you need to keep reliable records of all your income and expenses, in case you need to seek the advice of a tax attorney: the more information you can provide your lawyer, the better he or she can help you.

Anyone having difficulty with figuring out what they owe in self-employment taxes in Berkeley, California should seek the assistance of a reliable tax attorney. Most tax attorneys also have a good familiarity of accounting, so making this determination probably won't be too hard for them. And on top of that, a skilled tax attorney can give you objective and useful legal advice, which can help prevent more significant issues from rising in the future.

27 Tax Law cases posted to LegalMatch lawyers in Berkeley

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Life in Berkeley

Berkeley, California is a city in Alameda County, California. Its population is currently about 113,000 people. Berkeley, California is located on the Eastern shores of the San Francisco Bay Area.

Berkeley, California is known for being home to the University of California, Berkeley, which is considered one of the top public universities in the United States.

Berkeley is also known as being a major center of mostly-liberal social activism. 

The economy of Berkeley, California is based almost entirely around the university. However, because UC Berkeley is a major center of scientific research, as well as the liberal arts, it employs a very large number of scientists and engineers, as well as noted luminaries in the liberal arts, such as lawyers and law professors.

The University of California, Berkeley School of Law is ranked as one of the top 5 law schools in the United States, and has produced some incredibly successful lawyers.

If you live in or near Berkeley, California and need legal advice, chances are good that a Berkeley, California attorney can help.

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