Self Employment Tax Lawyers in Circle Pines

In Circle Pines, Minnesota, 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.

But what if you're self-employed? You're still obliged to pay these taxes, since you will also be eligible for those retirement programs. It's also your responsibility to determine what your tax liability is.

Most frequently, employers handle all of these calculations. With regular salaried and hourly employees, this is an easy process, and any decent payroll computer software can do it automatically. However, if you work for yourself, it is your responsibility to figure out precisely what you owe.

Self-Employment tax obligations in Circle Pines, Minnesota

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.

Employees in a regular employer/employee relationship do enjoy one substantial 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 essentially doubles your contribution to these programs, without doubling their financial burden on you.

But, if you are a self-employed business owner in Circle Pines, Minnesota, you are liable for both the employee and employer contributions to Medicare and Social Security. This basically doubles your self-employment tax rate.

Currently, the self-employment tax rate in the United States is 15.30% of all income earned from self-employment in Circle Pines, Minnesota. However, half of your hypothetical self-employment tax liability can be deducted from your income. This means that you only pay self-employment tax on about 92% of your income, which creates an effective self-employment tax rate of just over 14%.

Can a Circle Pines, Minnesota Tax Attorney Help?

If you work for yourself in Circle Pines, you have to stay on top of your self-employment taxes, to avoid facing significant legal and financial issues later on. This means you need to keep reliable records of all your income and expenses, in case you need to seek the advice of a tax attorney: the more information you can provide your lawyer, the better he or she can help you.

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 Circle Pines, Minnesota 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.