Self Employment Tax in Escondido, California
In Escondido, 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 Escondido, California
If you primarily work as an independent contractor, or are the owner of a sole proprietorship, you have to pay what's typically referred to as the "self-employment tax," if your annual income from self-employment is over $400.
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.
But, self-employed workers in Escondido, California must make both the employee and employer contributions. So, this means that the Medicare and Social Security tax liabilities apply doubly to the self-employed.
In Escondido, California, 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 additional 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 Escondido, California Tax Attorney Help?
If you are self-employed in Escondido, 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.
With all that said, if you are having difficulty determining just how much money you owe in Medicare and Social Security taxes from self-employment in Escondido, California, 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 serious legal issue over your self-employment tax liability, a tax attorney may prove to be invaluable.
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Life in EscondidoEscondido is located in San Diego County, California. The name "Escondido" is a Spanish word meaning "hidden". This is in reference to the city being situated in a valley and bordered by scenic hills. Escondido has a population of about 144,000 and is growing at a rapid rate.
Many major business and companies have their headquarters in Escondido, California. Some of the major employers for Escondido residents include Stone Brewing Company, and the San Diego Zoo Safari Park. Escondido's population growth is supported by the presence of several residential communities, including Hidden Trails and Valley Center.
Escondido, California is an excellent city for leisure and entertainment. The downtown area features a number of cafes, art galleries, and restaurants. During the spring and summer seasons, the city hosts "Crusin' Grand", which is a public automobile show held every Friday. Crusin' Grand features ultra-hip hot rods, historic cars, and live DJ music. Other fun events include the Grape Day Parade and Festival, the Community Wellness Expo, and an Independence Day Celebration.
Lawyers in Escondido assist their clients through a variety of legal services. Escondido, California attorneys also contribute to the community through participation in city planning and development projects. Escondido lawyers are knowledgeable of the various laws and regulations that are unique to the city.