Self Employment Tax Lawyers in University Place

In the U.S., University Place, Washington included, almost everyone who is employed during most of their adult life is qualified 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 accountable for these taxes, and are responsible for figuring out how much they owe.

Normally, it's the employer who makes all these calculations, and the employee doesn't have to think about it. Most larger employers have payroll departments to take these matters, making it pretty simple for them. But, if you are self-employed, it's up to you to accurately determine what you have to pay in self-employment taxes

Self-Employment tax obligations in University Place, Washington

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 everybody who makes more than per year from self-employment.

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

However, if you are a self-employed business owner in University Place, Washington, you are accountable for both the employee and employer contributions to Medicare and Social Security. This essentially doubles your self-employment tax rate.

The self-employment tax rate is 15.3% of all self-employment income, assuming your income from self-employment exceeds per year in University Place, Washington. But half of your self-employment tax liability can be deducted from your income tax. This results in a slightly reduced 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 University Place, Washington Tax Attorney Help?

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

Therefore, if you have some trouble figuring out what you owe in self-employment taxes, for whatever reason, chances are good that a reliable tax attorney in University Place, Washington can assist you with much trouble, and can provide you with good legal and financial advice, which can help you head off much more severe legal and financial issues.