Self Employment Tax Lawyers in Herndon
In the U.S., Herndon, Virginia included, almost everyone who is employed during most of their adult life is eligible for Social Security and Medicare benefits when they retire. These programs are supported by taxes deducted from the paychecks of most employees.
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, 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 Herndon, Virginia
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 .
Employees in a regular employer/employee relationship do enjoy one significant 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 effectively doubles your contribution to these programs, without doubling their financial burden on you.
However, self-employed workers in Herndon, Virginia must make both the employee and employer contributions. So, this means that the Medicare and Social Security tax liabilities apply doubly to the self-employed.
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 Herndon, Virginia 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 Herndon, Virginia Tax Attorney Help?
Self-employed individuals in Herndon must ensure that they keep good, thorough financial records. This makes it much easier to determine what you owe, and, if you need a tax attorney, it makes it easier for them to help you with your legal tax issues.
If you have any difficulty calculating your self-employment tax liability, an experienced Herndon, Virginia tax attorney would likely have very little trouble assisting you figure it out. A reputable lawyer can also give you practical legal advice, which can help you avoid more significant tax law issues in the future, by dealing with them before they become problematic.