Virtual Assistant Taxes in Michigan - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Essentials for a Virtual Assistant in Michigan

Michigan’s thriving business landscape offers numerous opportunities for skilled Virtual Assistants, but navigating the tax implications of self-employment is crucial for success.

As a Virtual Assistant operating in Michigan, all income earned must be reported to the IRS. This typically involves filing a Schedule C (Profit or Loss from Business) with your federal income tax return (Form 1040). Crucially, earnings exceeding $400 are subject to self-employment tax, which covers both Social Security and Medicare contributions. Accurate record-keeping throughout the year is essential to ensure proper reporting and maximize potential deductions.

How Michigan Handles Gig Worker Taxes

As a resident of Michigan, a state income tax return is required regardless of income level. Michigan operates under a flat income tax rate, currently 4.05% for the 2025 tax year. This means all taxable income is taxed at the same rate. Self-employed individuals in Michigan report their business income and expenses on Form MI-1040, Schedule 1 (Supplemental Income and Adjustments). It’s important to note that Michigan also requires the filing of Schedule MI-SE (Self-Employment Earnings) to calculate the Michigan share of self-employment tax. This tax mirrors the federal self-employment tax, covering Social Security and Medicare contributions. Michigan offers several credits and deductions that can reduce your tax liability, so thorough research is recommended. Estimated tax payments are generally required quarterly if your expected tax liability is $500 or more. Failure to pay estimated taxes can result in penalties. The Michigan Department of Treasury provides comprehensive resources and forms online.

For more information and access to forms, please visit the Michigan Department of Treasury: Michigan Department of Treasury

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 of the home used for business (capped at 300 square feet), or the actual expense method. The actual expense method requires calculating the percentage of the home used for business and deducting that percentage of mortgage interest, rent, utilities, insurance, and depreciation.
• 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 versus personal use to accurately determine this percentage.

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 (set annually by the IRS) or actual vehicle expenses.

The 15.3% Self-Employment Tax Explained

The 15.3% self-employment tax is comprised of two components: 12.4% for Social Security and 2.9% for Medicare. This tax is essentially the equivalent of the Social Security and Medicare taxes withheld from an employee’s paycheck. However, as a self-employed individual, you are responsible for paying both the employer and employee portions of these taxes. You can deduct one-half of your self-employment tax from your gross income when calculating your adjusted gross income (AGI).