Self Employment Tax Lawyers in Little Falls
In Little Falls, New Jersey, a few different taxes are placed on employees, and subtracted from their gross pay during each pay period. The examples that most people are familiar with are the taxes imposed to fund Medicare and Social Security, which get their funding mostly from these relatively small pay deductions.
It's necessaryl 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 clearly how much you owe.
Usually, 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 Little Falls, 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 larger than per year.
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.
But, if you are a self-employed business owner in Little Falls, New Jersey, you are accountable for both the employee and employer contributions to Medicare and Social Security. This basically 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 Little Falls, New Jersey. But half of your self-employment tax liability can be deducted from your income tax. This results in a slightly lower 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 Little Falls, New Jersey Tax Attorney Help?
Self-employed individuals in Little Falls must ensure that they keep good, complete financial records. This makes it much easier to determine what you owe, and, if you need a tax attorney, it makes it easier for them to assist you with your legal tax contentions.
Therefore, if you have some trouble figuring out what you owe in self-employment taxes, for whatever reason, chances are good that a reliable tax attorney in Little Falls, New Jersey can assist you with much trouble, and can provide you with good legal and financial advice, which can help you head off much more severe legal and financial issues.