Self Employment Tax Lawyers in Lincroft

In Lincroft, New Jersey, a few different taxes are enforced on employees, and subtracted from their gross pay during each pay period. The examples that most people are acquainted with are the taxes imposed to fund Medicare and Social Security, which get their funding mostly from these relatively small pay deductions.

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.

Normally, the employer makes all the necessary calculations and deductions from a person's paycheck. If you are self-employed, however, you are required to make this determination, and to ensure that it's accurate.

Self-Employment tax obligations in Lincroft, New Jersey

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.

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.

However, if you are a self-employed business owner in Lincroft, New Jersey, you are liable for both the employee and employer contributions to Medicare and Social Security. This essentially doubles your self-employment tax rate.

The self-employment tax rate is 15.3% of all self-employment income, assuming your income from self-employment exceeds per year in Lincroft, New Jersey. But half of your self-employment tax liability can be deducted from your income tax. This results in a slightly reduced income tax bill, which partially offsets this additional tax burden. It essentially means that the self-employment tax only applies to 92% of your income, as opposed to all of it. This means that your effective self-employment tax rate is about 14%, as opposed to over 15%.

Can a Lincroft, New Jersey Tax Attorney Help?

If you are self-employed in Lincroft, 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 advise you with a legal issue, and they can help you far more efficiently if you are able to quickly present them with all the relevant information.

That said, if you are encountering trouble figuring out precisely how much self-employment tax you owe in Lincroft, New Jersey, 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.