Self Employment Tax in Laguna Niguel, California
In Laguna Niguel, California, there are particular taxes that are imposed on employees, which are deducted from their paychecks. The generally 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 clearly how much you owe, to ensure that you don't pay more or less than you are obligated to.
Normally, it's the employer who does all the calculations, determining 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 ensure that your figures are accurate.
Self-Employment tax obligations in Laguna Niguel, California
If you derive even a small percentage of your income from running your own business, or working as an independent contractor, you have to pay the "self-employment tax." This tax applies to everyone who makes more than $400 per year from self-employment.
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, basically doubling the amount of money that's contributed to these funds on the employee's behalf.
But, if you are a self-employed business owner in Laguna Niguel, California, you are accountable for both the employee and employer contributions to Medicare and Social Security. This basically doubles your self-employment tax rate.
Currently, the self-employment tax rate in the United States is 15.30% of all income earned from self-employment in Laguna Niguel, California. However, half of your hypothetical self-employment tax liability can be deducted from your income. This means that you only pay self-employment tax on about 92% of your income, which creates an effective self-employment tax rate of just over 14%.
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Can a Laguna Niguel, California Tax Attorney Help?
Self-employed individuals in Laguna Niguel must ensure that they keep good, complete financial records. This makes it much easier to determine what you owe, and, if you need a tax attorney, it makes it easier for them to assist you with your legal tax contentions.
If you have any difficulty calculating your self-employment tax liability, an accomplished Laguna Niguel, California tax attorney would probably have very little trouble helping you figure it out. A brilliant lawyer can also give you practical legal advice, which can help you avoid more serious tax law issues in the future, by dealing with them before they become problematic.