Self Employment Tax Lawyers in Lafayette

In the U.S., including in Lafayette, Tennessee, taxes are enforced on employees, which are usually deducted from their paychecks. The ones that most people are acquainted 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 extremely important to know that, if you are self-employed, you still have to pay those taxes, and it's also up to you to figure out exactly how much you owe, to confirm that you don't pay more or less than you are required to.

Usually, it's the employer who does all the calculations, deciding 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 confirm that your figures are accurate.

Self-Employment tax obligations in Lafayette, Tennessee

If you mainly work as an independent contractor, or are the owner of a sole proprietorship, you have to pay what's usually 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.

But, the self-employed in Lafayette, Tennessee 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 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 Lafayette, Tennessee 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 Lafayette, Tennessee Tax Attorney Help?

If you are self-employed in Lafayette, 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.

With all that said, if you are having difficulty deciding just how much money you owe in Medicare and Social Security taxes from self-employment in Lafayette, Tennessee, and keep good financial records, it should be relatively easy for a decent tax attorney to help you. And, if you end up facing a more serious legal issue over your self-employment tax liability, a tax attorney may prove to be invaluable.