Self Employment Tax Lawyers in Dracut

In Dracut, Massachusetts, some taxes are levied 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.

It's necessaryl to be aware of one fact: if you're self-employed, you still have to pay these taxes. And it's your responsibility (or the responsibility of someone you hire for this purpose) to figure out clearly how much you owe.

Usually, the employer makes all the necessary calculations and deductions from a person's paycheck. If you are self-employed, however, you are required to make this determination, and to ensure that it's accurate.

Self-Employment tax obligations in Dracut, Massachusetts

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.

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.

But, if you are self-employed in Dracut, Massachusetts, you are accountable to pay both the employee and employer share of the employment tax. Basically, this means that the employment tax for self-employed individuals is double what it would be for regular employees.

The self-employment tax rate is 15.3% of all self-employment income, assuming your income from self-employment exceeds per year in Dracut, Massachusetts. 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 Dracut, Massachusetts Tax Attorney Help?

Self-employed individuals in Dracut 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.

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 Dracut, Massachusetts 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.