Self Employment Tax Lawyers in Homer Glen
In Homer Glen, Illinois, some taxes are placed on employees, and deducted from their paychecks. Most people are aware of the Medicare and Social Security taxes - which fund those two programs by taking a small percentage of every paycheck an employee receives.
Individuals who are self-employed are still accountable for these taxes, and are responsible for figuring out how much they owe.
Most commonly, employers handle all of these calculations. With regular salaried and hourly employees, this is an easy process, and any decent payroll computer software can do it automatically. However, if you work for yourself, it is your responsibility to figure out clearly what you owe.
Self-Employment tax obligations in Homer Glen, Illinois
If you are an independent contractor, or run a sole proprietorship (a company which you own, and which is not incorporated as a separate legal entity), you must pay the so-called "self-employment tax" if your income from self-employment is larger than per year.
Individuals who are not self-employed, and work for another person or company, have their contributions to Medicare and Social Security matched by their employers. This means that these programs are acquiring, on your behalf, twice as much money as what's deducted for your paycheck, with your employer covering the other half.
However, the self-employed in Homer Glen, Illinois are responsible for making the employer AND employee contributions to those programs, basically doubling what they would have to pay if they were employed by someone else.
The total self-employment tax (note that this is completely distinct from the income tax) is set at 15.3%, if your income from self-employment in Homer Glen, Illinois exceeds . However, half of this tax is deducted from your income, for income tax purposes. Therefore, this means that, at most, the self-employed only have to pay income on 92% of their total income, and that amount may be lowered with additional deductions for which you may be eligible. This means that, basically, the self-employment tax rate is only 14%, as opposed to 15.3%
Can a Homer Glen, Illinois Tax Attorney Help?
If you're self-employed in Homer Glen, you need to keep complete records of all your income and expenses from the operation of your business. This will make it much easier for you to calculate your taxes when they come due, and it will make it easier for a tax attorney to give you good, useful advice, should you eventually need it.
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 Homer Glen, Illinois, 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.