Self Employment Tax Lawyers in Millinocket

In Millinocket, Maine, 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 imperativel 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 precisely how much you 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 typically very simple, and any decent payroll software can automate this process. But the self-employed are liable for figuring this out for themselves, or hiring an accountant to do it.

Self-Employment tax obligations in Millinocket, Maine

If you work as an independent contractor, or operate a sole proprietorship, you are deemed to be "self employed." You are obliged to pay the self-employment tax if your total income from self-employment exceeds per year.

For people who are employed by another person or company, the employer typically matches the employee's contributions to Medicare and Social Security. This essentially means that, when you look at your Medicare and Social Security tax statements on your paychecks, you can know that those programs are actually getting double what's shown there - with your employer covering the other half.

But, the self-employed in Millinocket, Maine are responsible for making the employer AND employee contributions to those programs, essentially doubling what they would have to pay if they were employed by someone else.

Self-employed workers in Millinocket, Maine 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 essentially 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 Millinocket, Maine Tax Attorney Help?

If you are self-employed in Millinocket, it's imperative that you keep good records of your income and expenses, because a tax attorney will only be able to advise you to the extent that you help yourself.

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 Millinocket, Maine 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.