Self Employment Tax in Flagstaff, Arizona
In Flagstaff, Arizona, there are certain taxes that are levied 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 essential to note that if you are self-employed, you're still liable for those taxes, and it's your responsibility to figure out what you owe.
In most cases, employers make all the necessary calculations to determine how much needs to be deducted from an employee's check to pay these taxes. It's usually very simple, and any decent payroll software can automate this process. But the self-employed are responsible for figuring this out for themselves, or hiring an accountant to do it.
Self-Employment tax obligations in Flagstaff, Arizona
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 significant amount of income from self-employment. You must pay these taxes if your income from self-employment is more than $400 annually.
For people who are employed by another person or company, the employer usually matches the employee's contributions to Medicare and Social Security. This effectively 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.
But, the self-employed in Flagstaff, Arizona are responsible for making the employer AND employee contributions to those programs, effectively doubling what they would have to pay if they were employed by someone else.
Self-employed workers in Flagstaff, Arizona 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 Flagstaff, Arizona Tax Attorney Help?
If you work for yourself in Flagstaff, you have to stay on top of your self-employment taxes, to avoid facing serious legal and financial issues later on. This means you need to keep excellent 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 Flagstaff, Arizona 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 egregious issues from arising in the future.
Self-Employment Tax Attorneys in the Largest AZ Cities
Life in FlagstaffWith a different name, Flagstaff was named after a Ponderosa Pine flagpole made by a scouting party from Boston. This name was given on July 4, 1876 while celebrating the United States Centennial. Flagstaff, Arizona is home to approximately 65,870 people, and is located in northern Arizona.
Popular attractions include the Grand Canyon National Park, Walnut Canyon National Monument, Wupatki National Monument, Barringer Crater, Glen Canyon National Recreation Area and Lake Powell. Obviously, Flagstaff is a nature-lover's heaven.
The economy is primarily based on lumber, railroad, and ranching. Many large corporations have locations in Flagstaff. Such corporations include Lowell Observatory, Nestle Purina PetCare, Walgreens, and W.L. Gore & Associates. With so many corporations and industries, Flagstaff is home to many small law firms with excellent attorneys devoted to excellent legal service. If need be for a large law firm, Phoenix firms are available, with attorneys always willing to make the short trip to Flagstaff. Therefore, Flagstaff is a community that is well-served by the legal industry.
As a side note, Flagstaff is known to many because running scenes from the hit film Forrest Gump were shot there! Overall, Flagstaff is a wonderful area rich in culture and industry.