Self Employment Tax Lawyers in Flora
In Flora, Illinois, 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.
But what if you're self-employed? You're still obligated to pay these taxes, since you will also be qualified for those retirement programs. It's also your responsibility to determine what your tax liability is.
Normally, it's the employer who makes all these calculations, and the employee doesn't have to think about it. Most larger employers have payroll departments to take these matters, making it pretty simple for them. But, if you are self-employed, it's up to you to accurately determine what you have to pay in self-employment taxes
Self-Employment tax obligations in Flora, Illinois
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 Flora, Illinois 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.
Self-employed workers in Flora, Illinois 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 basically 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%.
Can a Flora, Illinois Tax Attorney Help?
If you are self-employed in Flora, it's necessary that you keep good records of your income and expenses, because a tax attorney will only be able to assist you to the extent that you help yourself.
Therefore, if you have some trouble figuring out what you owe in self-employment taxes, for whatever reason, chances are good that a reliable tax attorney in Flora, Illinois can assist you with much trouble, and can provide you with good legal and financial advice, which can help you head off much more severe legal and financial issues.