Virtual Assistant Taxes in Indiana - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Essentials for a Virtual Assistant in Indiana

Indiana’s growing entrepreneurial spirit makes it a fantastic place to build a virtual assistant business, but navigating the tax landscape requires careful attention. As a self-employed virtual assistant, understanding your federal and state tax obligations is crucial for financial success and avoiding penalties.

The IRS requires all self-employed individuals, including virtual assistants, to report business income and expenses on Schedule C (Profit or Loss From Business) with Form 1040. Furthermore, earnings exceeding $400 necessitate the payment of self-employment tax, covering both Social Security and Medicare contributions.

How Indiana Handles Gig Worker Taxes

As a resident of Indiana, a state income tax return is required regardless of whether you anticipate owing state taxes. Indiana operates under a flat income tax rate, currently at 3.15% for the 2025 tax year. This means all taxable income is subject to the same rate. Virtual assistants operating as sole proprietors or single-member LLCs will generally report their business income and expenses on Schedule IN-1040, which is filed alongside the federal Form 1040. The primary form for calculating Indiana adjusted gross income and tax liability for self-employed individuals is Form IT-1040. Indiana also requires the payment of county taxes, which vary by location. Estimated tax payments are generally required if your expected tax liability is $1,000 or more. Indiana’s Department of Revenue offers resources and online filing options, making compliance more accessible. It’s important to note that Indiana conforms to many federal deductions, but it’s always best to verify specific deductions with the latest state guidelines. Indiana also offers a business personal property tax, which may apply depending on the value of business assets. Staying informed about changes to Indiana tax law is vital for accurate filing and maximizing potential savings.

For more information and resources, please visit the Indiana Department of Revenue: https://www.in.gov/dor/

Key Tax Deductions for Home-Based Virtual Assistants

• Home Office Deduction: The home office deduction allows virtual assistants to deduct expenses related to the portion of their home exclusively and regularly used for business. “Exclusive use” means that space is only used for work, and “regular use” means it’s used consistently for business activities. Taxpayers can choose between the simplified method, which offers a standard deduction of $5 per square foot (up to 300 square feet), or the actual expense method, which requires calculating the percentage of the home used for business and deducting a proportionate share of mortgage interest, rent, utilities, and other related expenses.
• Hardware & Software: The cost of essential hardware, such as computers, webcams, and printers, is generally deductible. Software expenses, including subscriptions to programs like Adobe Creative Cloud, project management tools, or website hosting, are also deductible as ordinary and necessary business expenses.
• Internet & Phone Bill: If a portion of your internet and phone service is used for business, you can deduct the business-use percentage. Carefully track how much time is spent on business-related activities versus personal use to accurately determine this percentage.

Note on Mileage: As a home-based worker, mileage is not a primary deduction. However, mileage can be claimed for occasional client meetings, trips to the post office for business purposes, or other work-related errands using the standard mileage rate or actual expenses.

The 15.3% Self-Employment Tax Explained

The 15.3% self-employment tax comprises two components: 12.4% for Social Security and 2.9% for Medicare. This tax is essentially the equivalent of the FICA taxes withheld from employees’ paychecks, but as a self-employed individual, you are responsible for paying both the employer and employee portions. You can deduct one-half of your self-employment tax from your gross income when calculating your adjusted gross income.