Self Employment Tax Lawyers in Dexter

In Dexter, Missouri, 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 obligated 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.

Normally, it's the employer who makes all these calculations, and the employee doesn't have to think about it. Most larger employers have payroll departments to take these matters, making it pretty simple for them. But, if you are self-employed, it's up to you to accurately determine what you have to pay in self-employment taxes

Self-Employment tax obligations in Dexter, Missouri

If you own a sole-proprietorship, or work primarily as an independent contractor, you need to pay the "self-employment tax" if you derive any considerable amount of income from self-employment. You must pay these taxes if your income from self-employment is more than annually.

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.

However, if you are self-employed in Dexter, Missouri, 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.

Self-employed workers in Dexter, Missouri pay a self-employment tax rate of 15.3% of their income that's derived from self-employment. However, half of whatever they end up paying in self-employment tax is deductible from income tax. This basically creates a tax deduction of nearly 8% of one's income, requiring you to only pay taxes on 92% of what you earn. Additional 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 Dexter, Missouri Tax Attorney Help?

If you are self-employed in Dexter, it's extremely important for you to be diligent in keeping records of your income and expenses, to ensure that you pay all the self-employment taxes that you owe (and also to make sure you don't over-pay). You may one day need a tax attorney to assist you with a legal issue, and they can help you far more effectively if you are able to quickly provide them with all the relevant information.

With all that said, if you are having difficulty determining just how much money you owe in Medicare and Social Security taxes from self-employment in Dexter, Missouri, and keep good financial records, it should be relatively easy for a decent tax attorney to help you. And, if you end up facing a more severe legal issue over your self-employment tax liability, a tax attorney may prove to be invaluable.