Self Employment Tax Lawyers in Shorewood
In Shorewood, Illinois, some taxes are enforced on employees, and deducted from their paychecks. Most people are cognizant 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 responsible for these taxes, and are responsible for figuring out how much they owe.
Typically, 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 oversee 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 Shorewood, 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 higher than 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, essentially doubling the amount of money that's contributed to these funds on the employee's behalf.
However, if you are a self-employed business owner in Shorewood, Illinois, you are liable for both the employee and employer contributions to Medicare and Social Security. This essentially doubles your self-employment tax rate.
The self-employment tax rate is 15.3% of all self-employment income, assuming your income from self-employment exceeds per year in Shorewood, Illinois. But half of your self-employment tax liability can be deducted from your income tax. This results in a slightly reduced 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%.
Can a Shorewood, Illinois Tax Attorney Help?
Self-employed individuals in Shorewood must ensure that they keep good, accurate financial records. This makes it much easier to determine what you owe, and, if you need a tax attorney, it makes it easier for them to advise you with your legal tax concerns.
Thus, if you have some trouble figuring out what you owe in self-employment taxes, for whatever reason, chances are good that a knowledgeable tax attorney in Shorewood, Illinois can advise you with much trouble, and can provide you with good legal and financial advice, which can help you head off much more significant legal and financial issues.