Self Employment Tax in Brea, California

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In Brea, California, there are certain taxes that are placed 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 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 exactly how much you owe, to ensure that you don't pay more or less than you are required to.

Usually, 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 Brea, California

If you work as an independent contractor, or operate a sole proprietorship, you are deemed to be "self employed." You are obligated to pay the self-employment tax if your total income from self-employment exceeds $400 per year.

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, effectively doubling the amount of money that's contributed to these funds on the employee's behalf.

However, the self-employed in Brea, California 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.

The self-employment tax rate is 15.3% of all self-employment income, assuming your income from self-employment exceeds $400 per year in Brea, California. But half of your self-employment tax liability can be deducted from your income tax. This results in a slightly lower income tax bill, which partially offsets this additional tax burden. It essentially means that the self-employment tax only applies to 92% of your income, as opposed to all of it. This means that your effective self-employment tax rate is about 14%, as opposed to over 15%.

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Can a Brea, California Tax Attorney Help?

If you are self-employed in Brea, 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 help you with a legal issue, and they can help you far more effectively if you are able to quickly provide them with all the relevant information.

If you have any difficulty calculating your self-employment tax liability, an experienced Brea, California tax attorney would probably have very little trouble helping you figure it out. A good lawyer can also give you practical legal advice, which can help you avoid more severe tax law issues in the future, by dealing with them before they become problematic.

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Life in Brea

Brea, California is a city in Orange County, California. Its population is slightly under 40,000 people. Brea is known for its warm climate, high standard of living, and low crime rates. In 2006, it was named by Sunset Magazine as one of the best suburbs to live in the Western United States.

Brea, California can trace its origins back to the late 1800s, when oil was discovered across much of Southern California. Brea became a boomtown as the oil industry moved in.

These days, the economy of Brea, California is largely dominated by banking, finance, retail, and other service-based industries. Many white-collar professionals, such as attorneys, live and work in Brea, California. Brea, California is the birthplace of Cruz Reynoso, a prominent civil rights lawyer, and the first Hispanic justice on the California Supreme Court.

There are many other lawyers in Brea, California who are not as famous as Mr. Reynoso, but who tirelessly advocate for their clients every day. If you need legal help, you could do a lot worse than finding a Brea, California lawyer.

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