Virtual Assistant Taxes in Maryland - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Essentials for a Virtual Assistant in Maryland

Maryland’s thriving business environment offers numerous opportunities for skilled Virtual Assistants, but navigating the tax landscape requires careful attention. As a self-employed professional, understanding your federal and state tax obligations is crucial for financial success.

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 Maryland Handles Gig Worker Taxes

As a resident of Maryland, a state income tax return is required regardless of income level. Maryland utilizes a graduated income tax system, meaning the tax rate increases as income rises. For the 2025 tax year, self-employed individuals will primarily use Form 502, Individual Income Tax Return, to report their income and calculate their Maryland state income tax liability. It’s important to note that Maryland also has a county income tax, which varies depending on the county of residence. This county tax is reported on Form 502 as well.

Maryland offers several options for calculating your state income tax. You may be required to make estimated tax payments quarterly if you anticipate owing $100 or more in Maryland state income tax. Failure to do so could result in penalties. The Maryland Comptroller’s Office provides detailed information and resources for self-employed individuals, including estimated tax payment vouchers and instructions. Additionally, Maryland allows for certain business credits and deductions that can reduce your overall tax burden. Careful record-keeping is essential to substantiate any deductions claimed. The state also has specific rules regarding the treatment of pass-through income from businesses, which may impact your tax liability. Consulting with a qualified tax professional familiar with Maryland tax law is highly recommended to ensure compliance and maximize potential savings.

For more information, please visit the Maryland Comptroller's Office: https://www.marylandtaxes.gov/

Key Tax Deductions for Home-Based Virtual Assistants

• Home Office Deduction: To qualify for the home office deduction, the space must be used exclusively and regularly for business. “Exclusive use” means the area is only used for work, not as a guest room or family space. “Regular use” implies consistent and frequent use for business activities. Taxpayers can choose between the simplified method, calculating the deduction at $5 per square foot (up to 300 square feet), or the actual expense method, which involves calculating a percentage of mortgage interest, rent, utilities, and other home-related expenses based on the business use of the home.
• 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 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. Accurate record-keeping of business usage is vital to support this deduction.

Note on Mileage: As a home-based worker, mileage deductions are less common. However, any travel directly related to client meetings, attending industry events, or procuring business supplies can be claimed 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 employer and employee portions of these taxes when working for a traditional employer. You receive credit for one-half of the self-employment tax on Form 1040.