Estimating independent contracting taxes when I am ALSO separately a full-time employee

Question

I currently have a full-time job where I make $80k/year. To supplement this I am going to do some independent contracting (evenings/weekends). I have seen advice for estimating taxes directed to people who are simply self-employed but I am not sure how/if that advice changes for someone who is contracting on the side while also working a full-time job as an employee.

I am using this question as a starting point, whose accepted answer recommends putting aside 15% for social security and medicare.

Since I am in the 25% tax bracket, should I set aside 40% of my earnings as an independent contractor or only 25% since I pay medicare/social security taxes through my full time salary?

Also, to what extent should I take into account exemptions like the kind I filed with my employer? I am married-filing-jointly, my wife currently is a-stay-at-home-mom and thus has no income, and I will claim two dependents on my 2015 tax return. With my employer that came out to 8-9 exemptions but I'm not sure how to factor this into what I set aside from my IC income.

Thanks in advance!

Answer 1

Married fling joint, the 25% bracket starts at $75,000 taxable. You are in the 15% bracket from your day job. $80k gross puts your taxable income under $60k.

Unless your side income will be over $30K, setting aside 15% for federal tax should be fine. But I'd want to avoid under withholding, and would use the day job to withhold more tax. I'd project my side income, divide by the number of pay periods, and adjust the W4 to ask that the dollar amount be withheld. This is different than changing the 'allowances', it's the line that says to withhold additional dollars.

Keep in mind, you need to plan for the 15% social security as well.