Self Employment Tax Lawyers in Newark

In Newark, New York, 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.

But what if you're self-employed? You're still required 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.

Typically, 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 Newark, New York

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

For people who are employed by another person or company, the employer usually matches the employee's contributions to Medicare and Social Security. This effectively means that, when you look at your Medicare and Social Security tax statements on your paychecks, you can know that those programs are actually getting double what's shown there - with your employer covering the other half.

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

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 Newark, New York exceeds . But, half of this tax is deducted from your income, for income tax purposes. So, 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, effectively, the self-employment tax rate is only 14%, as opposed to 15.3%

Can a Newark, New York Tax Attorney Help?

Self-employed individuals in Newark must ensure that they keep good, thorough 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 help you with your legal tax issues.

That said, if you are encountering trouble figuring out exactly how much self-employment tax you owe in Newark, New York, 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.