Self Employment Taxes
Self employment taxes can make a big difference for the self employed. They can be a noose around the small business owner’s neck or a a way to save money. According to the U.S. Dept. of Commerce, Census Bureau, Current Population Survey, March Supplement, of the 15.5 million individuals whose primary occupation was self-employment (incorporated and unincorporated), the median personal marginal federal self employment tax rate was 10 percent in 2008. Only 4.1 percent of the self-employed were in the marginal tax bracket of 33 percent or more.
The question I ask is “Do these self employed tax rates show that the self employed are barely making it or are they making more than the rest of us because they are getting really great tax benefits?” I would like to think it is the later.
I have always said that your own small business is your best tax deduction. The truth is that in the self employment taxes realm, there are a myriad of great tax deductions that if taken advantage of can really lower your taxes.
Before people panic and think that the self employed tax rate shows that small businesses are failing, it may be a good idea to conduct further research and see if small businesses are just taking advantage of the great tax deductions available to them. If you are a small business man who is barely making it, take a look at my 10 Tax Tips, they could make a big difference for you.
