Self Employment Tax in Huntsville, Alabama
In Huntsville, Alabama, there are particular taxes that are enforced 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 critical 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.
Most commonly, employers handle all of these calculations. With regular salaried and hourly employees, this is an easy procedure, and any decent payroll computer software can do it automatically. But, if you work for yourself, it is your responsibility to figure out clearly what you owe.
Self-Employment tax obligations in Huntsville, Alabama
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 everybody who makes more than $400 per year from self-employment.
For people who are employed by another person or company, the employer normally matches the employee's contributions to Medicare and Social Security. This basically means that, when you look at your Medicare and Social Security tax statements on your paychecks, you can know that those programs are actually getting double what's shown there - with your employer covering the other half.
However, if you are a self-employed business owner in Huntsville, Alabama, you are accountable for both the employee and employer contributions to Medicare and Social Security. This essentially doubles your self-employment tax rate.
In Huntsville, Alabama, self-employed business owners pay a self-employment tax rate of 15.3%. This is, of course, separate from, and additional to, whatever they pay in income tax. In an effort to partially offset this further tax burden, half of what one pays in self-employment taxes can be deducted from their income when filing their income taxes. This means that the self employed pay income taxes on, at most, 92% of their income. And it's probably less, thanks to all the other deductions they might qualify for. This deduction lowers the effective self-employment tax rate to 14%, rather than the "official" rate of over 15%.
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Can a Huntsville, Alabama Tax Attorney Help?
If you are self-employed in Huntsville, it's extremely important for you to be diligent in keeping records of your income and expenses, to ensure that you pay all the self-employment taxes that you owe (and also to make sure you don't over-pay). You may one day need a tax attorney to assist you with a legal issue, and they can help you far more efficiently if you are able to quickly present them with all the relevant information.
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 Huntsville, Alabama, 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.
Self-Employment Tax Attorneys in the Largest AL Cities
Life in Huntsville
With close to 180,000 residents, Huntsville Alabama is a city that is home to some major attractions. Located in the Northern region of Alabama, Huntsville was named on "America's Dozen Distinctive Destinations for 2010 by the National Trust for Historic Preservation. How did Huntsville get this honor? Because of the great amount of civil war history, NASA rockets, and beautiful geography Huntsville has to offer its residents and visitors alike.
Huntsville is located in the Tennessee River Valley, a location that lends itself to hot summers and mild winters. Because of its location, Huntsville also has tornadoes in the spring and fall.
The Marshall Flight Center is another major point of interest in Huntsville. Dedicated by President Eisenhower, the presence of the flight center has given Huntsville its nickname-- "Rocket City" and has been home to some great space developments since the 1950's.
Professional industries also thrive in Huntsville. Huntsville lawyers are a great asset to the city and the overall legal profession. Lawyers specializing in a range of practices are available to serve their clients with any legal need he or she may have. Huntsville is simply a great place to work, live, and play.