Self Employment Tax in Lynwood, California

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In Lynwood, California, there are specific taxes that are imposed 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 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 precisely how much you owe, to ensure that you don't pay more or less than you are obliged to.

Typically, 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 Lynwood, 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.

Persons who are not self-employed, and work for another person or company, have their contributions to Medicare and Social Security matched by their employers. This means that these programs are getting, on your behalf, twice as much money as what's deducted for your paycheck, with your employer covering the other half.

However, if you're self employed in Lynwood, California, or anywhere else, you are obliged to make the employee AND employer contributions to Social Security and Medicare, essentially doubling your employment tax liability.

Currently, the self-employment tax rate in the United States is 15.30% of all income earned from self-employment in Lynwood, 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 Lynwood, California Tax Attorney Help?

If you work for yourself in Lynwood, 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 Lynwood, California should seek the assistance of a knowledgeable 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 serious issues from rising in the future.

3 Tax Law cases posted to LegalMatch lawyers in Lynwood

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