Self Employment Tax Lawyers in Fleetwood

In the U.S., including in Fleetwood, Pennsylvania, 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.

It's important to note that if you are self-employed, you're still liable for those taxes, and it's your responsibility to figure out what you owe.

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 Fleetwood, Pennsylvania

If you own a sole-proprietorship, or work primarily 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.

But, if you are a self-employed business owner in Fleetwood, Pennsylvania, you are responsible for both the employee and employer contributions to Medicare and Social Security. This basically doubles your self-employment tax rate.

In Fleetwood, Pennsylvania, 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 Fleetwood, Pennsylvania Tax Attorney Help?

If you are self-employed in Fleetwood, it's essential that you keep good records of your income and expenses, because a tax attorney will only be able to help you to the extent that you help yourself.

If you have any difficulty calculating your self-employment tax liability, an experienced Fleetwood, Pennsylvania tax attorney would probably have very little trouble helping you figure it out. A good lawyer can also give you practical legal advice, which can help you avoid more serious tax law issues in the future, by dealing with them before they become problematic.