How Will Obama’s Tax Plan Affect Self Employed Americans?

Self employed taxpayers get the honor of paying the self employment tax on top of their regular income tax.  This can be quite a burden, especially for new business owners.

There has been some indication that there will be tax relief for small business owners in President-Elect Obama’s new tax plan.

So how will the new tax plan affect you, as a self employed individual (or couple)?

According to BarackObama.com, the new tax plan will include:

A $1,000 “Making Work Pay” Tax Credit. For 95 percent of workers and their families—150 million workers overall—the “Making Work Pay” credit will provide a refundable tax cut of $500 for workers or $1,000 for working couples. This credit will benefit over 15 million self employed workers and for 10 million low-income Americans, will completely eliminate their federal income taxes.

Since this is a refundable tax credit, this credit will help reduce your self employment tax in addition to your regular tax.  This is good news, as many of the tax credits available now are non-refundable, and therefore don’t help reduce the self employment tax, which is the largest burden for many sole proprietors.

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