as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.
system
about to start being an independent contractor - any advice on estimating taxes?
user
i agree with your strategy of using a conservative estimate to overpay taxes and get a refund next year. as a self-employed individual you are responsible for paying self-employment tax (which means paying social security and medicare tax for yourself as both: employee and an employer.) current social security rate is 6.2% and medicare is 1.45%, so your self-employment tax is 15.3% (7.65%x2) assuming you are single, your effective tax rate will be over 10% (portion of your income under $ 9,075), but less than 15% ($9,075-$36,900), so to adopt a conservative approach, let's use the 15% number.  given self-employment and federal income tax rate estimates, very conservative approach, your estimated tax can be 30% (self-employment tax plus income tax) should you expect much higher compensation, you might move to the 25% tax bracket and adjust this amount to 40%.
assistant