Self Employment Tax Lawyers in Hamburg

In the U.S., including in Hamburg, Pennsylvania, taxes are levied on employees, which are normally deducted from their paychecks. The ones that most people are acquainted with are the Medicare and Social Security taxes. The idea is that workers pay into these programs during their entire working lives, and then enjoy the benefits they provide once they retire.

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

Usually, the employer makes all the necessary calculations and deductions from a person's paycheck. If you are self-employed, however, you are required to make this determination, and to ensure that it's accurate.

Self-Employment tax obligations in Hamburg, Pennsylvania

If you own a sole-proprietorship, or work mainly as an independent contractor, you need to pay the "self-employment tax" if you derive any considerable amount of income from self-employment. You must pay these taxes if your income from self-employment is more than annually.

Employees in a regular employer/employee relationship do enjoy one considerable perk that the self-employed do not: their Social Security and Medicare contributions are matched by their employers. So, if you pay in Social Security and Medicare taxes with every paycheck, your employer has to match that. This basically doubles your contribution to these programs, without doubling their financial burden on you.

However, self-employed workers in Hamburg, Pennsylvania must make both the employee and employer contributions. Therefore, this means that the Medicare and Social Security tax liabilities apply doubly to the self-employed.

Currently, the self-employment tax rate in the United States is 15.30% of all income earned from self-employment in Hamburg, Pennsylvania. Nonetheless, 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%.

Can a Hamburg, Pennsylvania Tax Attorney Help?

If you're self-employed in Hamburg, you need to keep complete records of all your income and expenses from the operation of your business. This will make it much easier for you to calculate your taxes when they come due, and it will make it simpler for a tax attorney to give you good, useful advice, should you eventually need it.

With all that said, if you are having difficulty deciding just how much money you owe in Medicare and Social Security taxes from self-employment in Hamburg, Pennsylvania, and keep good financial records, it should be relatively easy for a decent tax attorney to help you. And, if you end up facing a more severe legal issue over your self-employment tax liability, a tax attorney may prove to be invaluable.