Self Employment Tax Lawyers in Watertown

In Watertown, 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.

Normally, it's the employer who does all the calculations, determining what deductions need to be made from a worker's paycheck to cover his or her tax liability. But if you are your own boss, you have to do this, and ensure that your figures are accurate.

Self-Employment tax obligations in Watertown, New York

If you work as an independent contractor, or operate a sole proprietorship, you are deemed to be "self employed." You are required to pay the self-employment tax if your total income from self-employment exceeds 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 Watertown, New York, you are accountable for both the employee and employer contributions to Medicare and Social Security. This basically doubles your self-employment tax rate.

The total self-employment tax (note that this is completely distinct from the income tax) is set at 15.3%, if your income from self-employment in Watertown, New York exceeds . However, half of this tax is deducted from your income, for income tax purposes. Therefore, 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 additional deductions for which you may be eligible. This means that, basically, the self-employment tax rate is only 14%, as opposed to 15.3%

Can a Watertown, New York Tax Attorney Help?

If you work for yourself in Watertown, you have to stay on top of your self-employment taxes, to avoid facing severe legal and financial issues later on. This means you need to keep superb records of all your income and expenses, in case you need to seek the advice of a tax attorney: the more information you can provide your lawyer, the better he or she can help you.

Anyone having difficulty with figuring out what they owe in self-employment taxes in Watertown, New York should seek the help of a brilliant tax attorney. Most tax attorneys also have a good understanding of accounting, so making this determination probably won't be too hard for them. And on top of that, a qualified tax attorney can give you objective and useful legal advice, which can help prevent more serious issues from forming in the future.