Self Employment Tax Lawyers in Wells
In Wells, 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 essentiall 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 exactly 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 usually very simple, and any decent payroll software can automate this process. But the self-employed are responsible for figuring this out for themselves, or hiring an accountant to do it.
Self-Employment tax obligations in Wells, Maine
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 greater than per year.
For ordinary employees, Social Security and Medicare payments are made in equal parts by the employee and employer. This effectively means that every employee's contribution to his or her future Medicare and Social Security benefits is matched by the employer.
However, if you are a self-employed business owner in Wells, Maine, you are responsible for both the employee and employer contributions to Medicare and Social Security. This essentially doubles your self-employment tax rate.
The total self-employment tax (note that this is totally distinct from the income tax) is set at 15.3%, if your income from self-employment in Wells, Maine exceeds . But, half of this tax is deducted from your income, for income tax purposes. So, 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 further deductions for which you may be eligible. This means that, effectively, the self-employment tax rate is only 14%, as opposed to 15.3%
Can a Wells, Maine Tax Attorney Help?
If you are self-employed in Wells, it's essential that you keep good records of your income and expenses, because a tax attorney will only be able to help you to the extent that you help yourself.
Anyone having difficulty with figuring out what they owe in self-employment taxes in Wells, Maine should seek the advice of a reputable tax attorney. Most tax attorneys also have a good knowledge of accounting, so making this determination probably won't be too hard for them. And on top of that, a competent tax attorney can give you objective and useful legal advice, which can help prevent more egregious issues from arising in the future.