Self Employment Tax Lawyers in Shenandoah
In the U.S., including in Shenandoah, Pennsylvania, taxes are placed on employees, which are typically 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 crucial to note that if you are self-employed, you're still responsible for those taxes, and it's your responsibility to figure out what you owe.
Most frequently, employers handle all of these calculations. With regular salaried and hourly employees, this is an easy process, and any decent payroll computer software can do it automatically. However, if you work for yourself, it is your responsibility to figure out precisely what you owe.
Self-Employment tax obligations in Shenandoah, Pennsylvania
If you derive even a small percentage of your income from running your own business, or working as an independent contractor, you have to pay the "self-employment tax." This tax applies to everyone who makes more than per year from self-employment.
For usual employees, Social Security and Medicare payments are made in equal parts by the employee and employer. This essentially means that every employee's contribution to his or her future Medicare and Social Security benefits is matched by the employer.
However, if you're self employed in Shenandoah, Pennsylvania, or anywhere else, you are obliged to make the employee AND employer contributions to Social Security and Medicare, essentially doubling your employment tax liability.
Self-employed workers in Shenandoah, Pennsylvania pay a self-employment tax rate of 15.3% of their income that's derived from self-employment. However, half of whatever they end up paying in self-employment tax is deductible from income tax. This essentially creates a tax deduction of nearly 8% of one's income, requiring you to only pay taxes on 92% of what you earn. Additional tax deductions may lower that number further. When this deduction is taken into account, the self-employment tax rate is effectively 14%, as opposed to over 15%.
Can a Shenandoah, Pennsylvania Tax Attorney Help?
If you are self-employed in Shenandoah, it's imperative that you keep good records of your income and expenses, because a tax attorney will only be able to advise you to the extent that you help yourself.
Thus, if you have some trouble figuring out what you owe in self-employment taxes, for whatever reason, chances are good that a knowledgeable tax attorney in Shenandoah, Pennsylvania can advise you with much trouble, and can provide you with good legal and financial advice, which can help you head off much more significant legal and financial issues.