Virtual assistants (VAs) support clients remotely with tasks like email management, scheduling, bookkeeping, social media, customer service, and research. It’s flexible work, but when you’re paid by clients instead of an employer, you’re responsible for your own taxes.
This guide explains the key tax points for VAs. It is educational, not tax advice. Verify details on IRS.gov or with a tax professional.
Are You an Independent Contractor or an Employee?
First, check how you’re classified:
- Independent contractor: you work for yourself, choose how and when you work, use your own equipment, and may have several clients. Clients pay you without withholding taxes, and you generally receive a Form 1099-NEC.
- Employee: if a VA agency or company hires you as an employee, you receive a W-2 and taxes are withheld from your pay.
Some VAs have both: a W-2 job with an agency and independent clients on the side. In that case, your freelance income is reported separately.
If a single client controls your schedule, tools, and methods very closely, you may be misclassified. If that’s a concern, review the IRS guidance on worker classification or ask a professional.
How Freelance VAs Are Taxed
If you’re an independent contractor:
- You report income and expenses on Schedule C with your personal tax return.
- You pay income tax on your net profit.
- You pay self-employment tax, which covers Social Security and Medicare. It’s generally 15.3% (12.4% for Social Security and 2.9% for Medicare) applied to most of your net earnings. See Self-Employment Tax Explained.
- You generally make quarterly estimated payments. See our Freelance Tax Deadlines: 2026–2027 Calendar.
Your state may also tax your income. See our guides for California, Texas, New York, Florida, Illinois, and Washington.
How VAs Get Paid (and What to Report)
VA income can come from:
- Hourly rates and project fees
- Monthly retainers from ongoing clients
- Payments through freelance platforms and marketplaces
- Bonuses, commissions, or performance pay
- Add-on services such as training or setup
All of it is generally taxable. If you use the cash method, income usually counts when you receive it, so a retainer paid in advance counts in the year it arrives.
Forms you may receive:
- Form 1099-NEC from clients who paid you for services
- Form 1099-K from platforms and payment apps
- Form W-2 if you also work as an agency employee
Reporting thresholds have changed in recent years, so don’t assume you won’t receive a form. Report all income either way. Since many VAs work with multiple clients, see How to File Taxes With Multiple 1099s.
Deductions for Virtual Assistants
An expense must be ordinary and necessary for your VA business. Common deductions include:
Equipment and technology
- Computer, monitor, headset, webcam, and microphone
- Printer, scanner, and office supplies
- Backup drives and surge protectors
- A second phone line or business phone, if used for business
If you use a device for both work and personal life, deduct only the business-use portion. Larger purchases can be deducted in different ways. See Last-Minute Tax Deductions Freelancers Can Still Claim Before Dec 31 and IRS Publication 946.
Software and subscriptions
- Project management, scheduling, and communication tools
- Password managers and security tools
- Email, CRM, and design software
- Video conferencing and cloud storage
- Invoicing and accounting software
- Time-tracking tools
Home office and utilities
- If you use part of your home regularly and exclusively for work, you may qualify for the home office deduction. See IRS Publication 587.
- Internet and phone costs, for the business-use portion
- Coworking space fees
Professional development
- Courses, certifications, and training related to your current services
- Memberships in VA associations and networking groups
- Books, newsletters, and software tutorials
Marketing and business costs
- Website, domain, and hosting
- Business cards, branding, and portfolio materials
- Advertising, job board fees, and premium profiles
- Networking event fees
Professional services
- Accountant, bookkeeper, and legal fees
- Contract templates and legal review
- Business insurance, such as professional liability
- Subcontractors or other VAs you hire
Travel and vehicle
- Business travel with records
- Mileage for client meetings or errands. See How to Track Mileage for Freelance Tax Deductions.
Insurance and retirement
- Self-employed health insurance premiums, with conditions
- Contributions to a SEP IRA or Solo 401(k). See SEP IRA vs. Solo 401(k).
General rules appear in IRS Publication 535.
Special Situations for VAs
Paying for things on behalf of clients
VAs often buy things for clients, such as software, gifts, ads, or supplies. How you handle this affects your taxes:
- If the client reimburses you and it’s clearly documented as a pass-through, the treatment may differ from your own business income and expenses.
- If you buy something and bill it to the client with a markup, the amount is generally part of your income.
- If possible, have clients pay vendors directly, or use the client’s own payment method.
Keep clear records and agreements, and ask a tax professional how to report reimbursements.
Handling client money or accounts
If you manage a client’s bank account, payroll, or ad budgets, keep their funds separate from your own. Never mix client money with your business account.
Hiring other VAs
If you subcontract work, collect a Form W-9 from each US contractor before paying. You may need to issue a Form 1099-NEC above the reporting threshold. Keep written agreements.
International clients
Report income from foreign clients in US dollars. Keep records of fees and exchange rates. If tax was withheld by another country, ask a professional.
Selling digital products
If you also sell templates, courses, or guides, sales tax rules may apply depending on your state.
Unpaid invoices
Cash-method VAs generally can’t deduct income they never received. Use clear contracts and payment terms to avoid late payments.
What You Can’t Deduct
- Personal expenses and the personal portion of mixed-use equipment
- Commuting if you work from home (home to client’s office isn’t business mileage in most cases)
- Expenses without records
- Money you spent on behalf of a client that was reimbursed, if it was handled as a pass-through
Record-Keeping Tips for VAs
- Open a separate business bank account.
- Track income by client and by month.
- Keep invoices, retainer agreements, and receipts.
- Use an expense tracking app and a receipt scanner.
- Set up a simple bookkeeping system.
- Keep a record of every client’s W-9 and tax details.
Build Taxes Into Your Rates
Many new VAs set their rates without accounting for taxes and business costs. Self-employment tax alone adds a significant cost compared with being an employee. When you set prices:
- Estimate your yearly expenses.
- Add the income you want to take home.
- Include taxes and unpaid time (admin, marketing, vacations).
- Divide by the billable hours or retainers you realistically expect.
Then set aside a percentage of every payment in a separate savings account for taxes. Review your plan before year-end with our Year-End Tax Planning Checklist for Freelancers.
Common Mistakes VAs Make
- Not saving for taxes.
- Missing quarterly payments.
- Mixing client money with personal funds.
- Forgetting small subscriptions and software costs.
- Not documenting reimbursements.
- Underpricing without accounting for self-employment tax.
- Ignoring income from platforms.
Frequently Asked Questions
Do virtual assistants pay self-employment tax?
Yes, if they work as independent contractors and earn above a small threshold.
Can I deduct my internet and phone?
Yes, for the business-use portion.
Do I need an LLC?
Not necessarily. See Sole Proprietor vs. LLC.
Do I need a business license?
It depends on your location. See Do Freelancers Need a Business License?.
What if I work for a VA agency?
If the agency treats you as an employee, you’ll get a W-2. If you’re a contractor, you’ll get a 1099-NEC. Check your classification.
Final Thoughts
Being a virtual assistant gives you flexibility, but it also means handling your own taxes. Track income by client, deduct the costs of running your business, save part of every payment, and keep client funds separate.
Disclaimer: This article is for informational and educational purposes only and does not constitute tax, legal, or financial advice. Tax laws and rules change and depend on your situation. Verify current information at IRS.gov or consult a licensed tax professional.
Last Update: October 13, 2026