Self Employment Tax Lawyers in Lancaster
In Lancaster, New York, a few different taxes are imposed 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.
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.
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 Lancaster, New York
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.
Workers who are employed by someone else enjoy at least one perk that the self-employed do not: their employer matches their Social Security and Medicare contributions, basically doubling the amount of money that's contributed to these funds on the employee's behalf.
However, if you are self-employed in Lancaster, New York, 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.
In Lancaster, New York, self-employed business owners pay a self-employment tax rate of 15.3%. This is, of course, separate from, and additional to, whatever they pay in income tax. In an effort to partially offset this additional tax burden, half of what one pays in self-employment taxes can be deducted from their income when filing their income taxes. This means that the self employed pay income taxes on, at most, 92% of their income. And it's probably less, thanks to all the other deductions they might qualify for. This deduction lowers the effective self-employment tax rate to 14%, rather than the "official" rate of over 15%.
Can a Lancaster, New York Tax Attorney Help?
If you're self-employed in Lancaster, you need to keep complete 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 easier for a tax attorney to give you good, useful advice, should you eventually need it.
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 Lancaster, New York 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.