Law Office of Tillena G. Clark, LLC

Directions7315 Wisconsin Ave., Suite 400W
Bethesda, Maryland 20814

Tax Newsletter

Social Security and Self-Employment Tax

The Internal Revenue Service requires certain individuals who have a trade or business to pay self-employment tax. What is the reason for this?

Social Security Withholdings

If you work for someone else, your employer is required under federal law to withhold certain amounts for Social Security coverage when you retire. Social Security coverage includes retirement benefits, disability benefits, survivor benefits, and hospital insurance benefits (Medicare).

Preparing for Your Retirement

When you are self-employed, you are responsible for making these Social Security contributions on your own, by way of the self-employment tax. It is very important that you carefully calculate the proper amount you must pay. Failure to do so may result in a lower amount of Social Security benefits when you retire.

You Must Still Qualify for Social Security

The Social Security Administration (SSA) regulates Social Security benefits. You qualify for Social Security benefits if:

  • You have a Social Security number
  • You earn the required number of credits, based upon amount of income earned per quarter. Currently the maximum number of credits you can earn per year is four.

File On Time

You must file your tax returns, and report self-employment income, in a timely manner. The Social Security Administration will not give you credit for self-employment income reported after a period of time from the year in which the income was earned. And if the SSA needs to make adjustments because of a late reporting, it will be to remove or reduce your coverage, not increase it.

  • You Must Pay Taxes on Life Insurance Proceeds
    A common misconception about life insurance is that it is “tax-free.” While the build up in cash value of a life insurance policy is typically not subject to any income tax, the death benefit payable on the policy may be... Read more.
  • What Are The Penalties For Not Filing Your Tax Return On Time?
    Many taxpayers at one time or another find themselves in a situation where they either did not file their Federal Income Tax return on time and/or filed their tax return without making the necessary payment for the tax year covered. In... Read more.
  • Deductions for Business Conducted on Cruise Ships
    It is common to conduct business on luxury travel vessels such as ocean liners and cruise ships. However, only in certain situations are some or all business expenses related to this type of travel deductible. Luxury... Read more.
  • Valuation of Contaminated Property
    The Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA) imposes liability for the investigation and cleanup of contaminated real property without regard to whether the landowner created or allowed the... Read more.
Tax News Links
Share This Page:
Designed and Powered by NextClient

© 2006 - 2017 Tillena G. Clark, LLC. All rights reserved.
Theme WebExpress™ attorney website design by