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How Sole Proprietors Can Minimize Their Self-Employment Tax Burdens

sole proprietors
Four Strategies for Managing the Self-Employment Tax

When you’re working as a sole proprietor, you are both the employer and the employee. While it’s a business model that can offer you the benefits of flexibility and control, there are also important self-employment tax implications.

Consider, for example, that all workers must pay into Social Security and Medicare. For typical workers, this means they split that cost with their employers, each paying 7.65% of the employee’s eligible wages. Sole proprietors don’t have the benefit of splitting the cost with an employer, meaning they must pay both halves – 15.3% of earned income. This is referred to as the self-employment tax, and there’s quite a bit you should know about it – both to follow the letter of the law, and to minimize your tax burden as a sole proprietor.

independent contractor, small business, sole proprietor, Tax planning

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Taxes Abroad: Claiming Foreign Taxes

taxes abroad
A Primer on How to Be Tax-Smart with Your Foreign Income

Do you own stocks, bonds, or mutual funds? If so, you may well have some foreign holdings such as BMW (German), or BP (British), or Nestle (Swiss). This means you have paid foreign taxes on the income you earned. Would you like to avoid being taxed on that income a second time? You may be able to accomplish this goal if you claim a credit or deduction on your U.S. tax return. Don’t count on your tax preparer or preparation software doing this optimally for you.

The information below applies to almost all U.S. investors since most hold foreign stocks in their U.S. mutual funds. Read on to learn how to be more tax-efficient with your foreign income.

cross-border, taxes

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© Wellacre Global Wealth Advisors 2020

WellAcre Global Wealth Advisors is a Registered Investment Adviser. Advisory services are only offered to clients or prospective clients where WellAcre Global Wealth Advisors and its representatives are properly licensed or exempt from licensure.  This website is solely for informational purposes.  Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by WellAcre Global Wealth Advisors unless a client service agreement is in place.