When I did contract work years ago, I found that adding in my required tax contribution to SS, etc., raised my overall tax rate to almost 50% of gross income. When you are calculating profit from this deal, I would subtract at least 40% for taxes (including income tax) to get a realistic estimate of your net profit. You might be better off taking a job that pays a lot less but is hourly or salaried rather than contract. (If I am remembering correctly, the extra taxes I paid amounted to about 15% of gross income. Add this percentage to whatever your usual income tax percentage is.)
Edit: OK, I did a little Google research and the above is not really accurate. It's true that in my case my net was only about 50% of gross, but that was being our tax bracket at the time was high because of my husband's work.
Basically you can estimate the self-employment tax as 15% of gross income. If you are in an 18% income tax bracket, then you would add 15% to 18% to get an estimated tax liability of 33% on your gross income.
When you are employed by someone else, they pay about half of the 15% into SS/Medicare and you are paying about half. When you are self-employed, you have to pay in both halves.
Last edited by Prism99; 01-17-2012 at 12:29 PM.