Self Employment Tax Lawyers in Kaukauna
In the U.S., Kaukauna, Wisconsin included, almost everyone who is employed during most of their adult life is suitable for Social Security and Medicare benefits when they retire. These programs are supported by taxes deducted from the paychecks of most employees.
It's essential 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.
Normally, 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 Kaukauna, Wisconsin
If you mainly work as an independent contractor, or are the owner of a sole proprietorship, you have to pay what's regularly referred to as the "self-employment tax," if your annual income from self-employment is over .
For people who are employed by another person or company, the employer typically matches the employee's contributions to Medicare and Social Security. This essentially 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, the self-employed in Kaukauna, Wisconsin are responsible for making the employer AND employee contributions to those programs, essentially doubling what they would have to pay if they were employed by someone else.
Self-employed workers in Kaukauna, Wisconsin pay a self-employment tax rate of 15.3% of their income that's derived from self-employment. But, 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. Further 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 Kaukauna, Wisconsin Tax Attorney Help?
If you are self-employed in Kaukauna, it's extremely important for you to be diligent in keeping records of your income and expenses, to ensure that you pay all the self-employment taxes that you owe (and also to make sure you don't over-pay). You may one day need a tax attorney to advise you with a legal issue, and they can help you far more efficiently if you are able to quickly present them with all the relevant information.
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 Kaukauna, Wisconsin, 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 significant legal issue over your self-employment tax liability, a tax attorney may prove to be invaluable.