Self Employment Tax Lawyers in Willowick

In the U.S., including in Willowick, Ohio, taxes are imposed on employees, which are usually deducted from their paychecks. The ones that most people are familiar with are the Medicare and Social Security taxes. The idea is that workers pay into these programs during their entire working lives, and then enjoy the benefits they provide once they retire.

Individuals who are self-employed are still liable for these taxes, and are responsible for figuring out how much they owe.

Usually, 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 Willowick, Ohio

If you primarily work as an independent contractor, or are the owner of a sole proprietorship, you have to pay what's commonly referred to as the "self-employment tax," if your annual income from self-employment is over .

For ordinary employees, Social Security and Medicare payments are made in equal parts by the employee and employer. This effectively means that every employee's contribution to his or her future Medicare and Social Security benefits is matched by the employer.

However, the self-employed in Willowick, Ohio are responsible for making the employer AND employee contributions to those programs, effectively doubling what they would have to pay if they were employed by someone else.

The self-employment tax rate is 15.3% of all self-employment income, assuming your income from self-employment exceeds per year in Willowick, Ohio. 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 Willowick, Ohio Tax Attorney Help?

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

That said, if you are having trouble figuring out exactly how much self-employment tax you owe in Willowick, Ohio, 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 obligation, a good tax attorney can give you the best possible chance of getting a favorable result.