Self Employment Tax Lawyers in Logansport

In Logansport, Indiana, some taxes are imposed 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.

In most cases, employers make all the necessary calculations to determine how much needs to be deducted from an employee's check to pay these taxes. It's normally very simple, and any decent payroll software can automate this process. But the self-employed are accountable for figuring this out for themselves, or hiring an accountant to do it.

Self-Employment tax obligations in Logansport, Indiana

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.

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

But, if you are a self-employed business owner in Logansport, Indiana, you are accountable for both the employee and employer contributions to Medicare and Social Security. This basically 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 Logansport, Indiana. 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%.

Can a Logansport, Indiana Tax Attorney Help?

Self-employed individuals in Logansport must ensure that they keep good, complete 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 assist you with your legal tax contentions.

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