Self Employment Tax in Elk Grove, California

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In Elk Grove, California, there are certain taxes that are enforced on employees, which are deducted from their paychecks. The mostly 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 extremely important to know that, if you are self-employed, you still have to pay those taxes, and it's also up to you to figure out exactly how much you owe, to confirm that you don't pay more or less than you are required to.

Usually, it's the employer who does all the calculations, deciding what deductions need to be made from a worker's paycheck to cover his or her tax liability. But if you are your own boss, you have to do this, and confirm that your figures are accurate.

Self-Employment tax obligations in Elk Grove, 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, effectively doubling the amount of money that's contributed to these funds on the employee's behalf.

However, self-employed workers in Elk Grove, California must make both the employee and employer contributions. So, this means that the Medicare and Social Security tax liabilities apply doubly to the self-employed.

Self-employed workers in Elk Grove, 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 effectively 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 Elk Grove, California Tax Attorney Help?

If you are self-employed in Elk Grove, it's essential that you keep good records of your income and expenses, because a tax attorney will only be able to help you to the extent that you help yourself.

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

8 Tax Law cases posted to LegalMatch lawyers in Elk Grove

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Life in Elk Grove

Elk Grove, California is a city in Sacramento County, located just south of Sacramento, the state capital. It currently has a population of about 153,000 people. 

Elk Grove was founded in 1850, as a stage coach stop, around which the town initially developed. 

Modernly, Elk Grove is generally considered a bedroom community of Sacramento. This means that it is mostly residential, with its residents commuting to Sacramento for their jobs. Because it is the capital of the largest state in the country, many state employees, in a wide range of industries, work in Sacramento, but live in Elk Grove. The State of California employs a large number of Elk Grove, California attorneys, who perform a wide variety of functions.

Of course, many Elk Grove attorneys also work in private practice. So, the residents of Elk Grove, California who need a lawyer will almost certainly be able to find a capable attorney who has experience in the relevant area of law.

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