The first payday of 2013 for most Americans won’t be as small as it could have been, but as those paydays come in the weeks ahead, make no mistake, those paychecks will be getting smaller. Every working American will see their take-home pay cut by the 2 percent increase in Social Security payments.
While Congress approved a deal not to raise income tax rates on Americans making under $400,000 (for couples $450,000), the agreement did not extend the employee payroll tax cut that has been law for the past two years or for the self employment tax.
Instead, every worker or self employed person will see the portion of their paychecks going toward Social Security go up 2 %, returning to the same percentage it was prior to 2011. A 2% increase doesn’t sound like much, but what they don’t tell you is the total self-employment tax (social security, Medicare, Obama care, etc. ) is 15%.
For the self employed, had they been Incorporated (a Corporation) they could have avoided most of this tax (Corporations do not pay self employment taxes).
So if you want to reduce your taxes, gain liability protection, and look profession, call my office and discuss incorporating now.