Self Employment Tax Lawyers in East Grand Forks

In East Grand Forks, Minnesota, 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.

But what if you're self-employed? You're still obliged to pay these taxes, since you will also be qualified 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 procedure, and any decent payroll computer software can do it automatically. But, if you work for yourself, it is your responsibility to figure out precisely what you owe.

Self-Employment tax obligations in East Grand Forks, Minnesota

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 higher than per year.

For usual employees, Social Security and Medicare payments are made in equal parts by the employee and employer. This essentially means that every employee's contribution to his or her future Medicare and Social Security benefits is matched by the employer.

But, the self-employed in East Grand Forks, Minnesota 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.

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 East Grand Forks, Minnesota exceeds . But, half of this tax is deducted from your income, for income tax purposes. Thus, 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, essentially, the self-employment tax rate is only 14%, as opposed to 15.3%

Can a East Grand Forks, Minnesota Tax Attorney Help?

If you're self-employed in East Grand Forks, you need to keep accurate records of all your income and expenses from the operation of your business. This will make it much easier for you to calculate your taxes when they come due, and it will make it simpler for a tax attorney to give you good, useful advice, should you eventually need it.

That said, if you are encountering trouble figuring out precisely how much self-employment tax you owe in East Grand Forks, Minnesota, a competent tax attorney shouldn't have any trouble helping you on that front. Likewise, if you end up in a dispute with the government over your self-employment tax requirement, a good tax attorney can give you the best possible chance of getting a favorable result.