How to File a Virginia Tax Return for 2023 If You’re Self-Employed

In Virginia, a self-employed person operates a business or trade without being classified as an employee. This includes sole proprietors, independent contractors, gig workers, and freelancers. You're considered self-employed if you earn income from services or goods outside of traditional employment. Even part-time freelance income may trigger self-employment tax obligations in Virginia.

Compliance with Virginia’s tax laws is critical for avoiding penalties and staying financially organized. Many self-employed individuals forget estimated tax payments or misunderstand state-specific filing rules. Failing to comply can result in audits, fines, and delayed refunds. Maintaining proper records and understanding your obligations supports sustainable, lawful business growth.

Self-employed individuals in Virginia must file state taxes if their income meets specific thresholds. Common mistakes include misreporting income, missing deductions, and forgetting local tax obligations. Many filers also incorrectly assume that federal filing automatically satisfies state requirements. Filing accurately ensures eligibility for refunds and helps avoid underpayment penalties.

General Filing Information: Completing a Virginia Tax Return for 2023

If you're self-employed in Virginia, understanding how to file your Virginia tax return for 2023 properly is critical for compliance—and potentially for maximizing your refund. Below is an in-depth overview of general filing information for completing your state tax return, focusing on filing thresholds, residency rules, and why you might still need to file even if your income is below the threshold.

• Minimum Filing Thresholds for Self-Employed Virginians: Self-employed individuals must file a Virginia return if their Virginia adjusted gross income (VAGI) meets or exceeds the minimum filing requirement:
  
  
  
  • $11,950 for single filers
    
    
  • $23,900 for married joint filers
    
    
  • These thresholds apply to calendar year and fiscal year filers.
    Even if your federal return is not required, you may still need to file a state return if you meet Virginia’s income thresholds. Check the Virginia Department website for annual updates.
    
    
• Residency Status Affects Filing Obligations: Virginia differentiates between full-year residents, part-year residents, and nonresidents:
  
  
  
  • Full-year residents must report all income from all sources.
    
    
  • Part-year residents file using Form 760PY, reporting income earned during Virginia residency.
    
    
  • Nonresidents with Virginia-source income may need to file Form 763.
    Residency status is key in determining your income tax obligations and which return tools or forms apply.
    
    
• Why File Even Below the Income Threshold: You might still want to file a Virginia tax return for 2023 even if you're under the income threshold. Why?
  
  
  
  • To claim a refund on tax paid through estimated payments or withholding.
    
    
  • To request refundable credits (like the Earned Income Credit).
    
    
  • This step is necessary to establish eligibility for free tax services or benefits linked to your filing history.
    
    
  • Filing allows access to free online filing options via approved tax preparation software listed by the Virginia Department.

File Electronically or by Paper, But Mind the Deadline

• The due date for filing your Virginia return is typically May 1, unless that date falls on a weekend or business day holiday (the next business day applies).
  
  
• With Virginia's branding bar cardinal certification, you can return electronically using commercial tax preparation software or free online filing options.
  
  
• Paper filing is still available, but it is slower. If using printed forms from the official site, include the branding bar with the Cardinal logo.
  
  
• Use Official Tools to Stay Accurate: Gather key documents like your federal return, 1099s, receipts, and Virginia estimated tax records before filing.
  
  • The Virginia Department offers calculators, forms, and return tools to estimate income tax.
    
    
  • Choose reliable tax preparation software, and consider requesting direct deposit for a faster refund.

Filing your Virginia tax return for 2023 correctly starts with knowing your residency status and income threshold—and it ends with choosing the right tools and methods, whether you're filing electronically or by mail. Always consult the Virginia Department for the latest filing information, especially if you're self-employed or filing on a non-standard fiscal year basis.

Income Tax Documents You Need Before You Begin

Before filing your Virginia tax return for 2023, it’s essential to gather all the required documentation to ensure your individual income tax submission is accurate, timely, and compliant with Virginia Department of Taxation guidelines. Below are the key documents you’ll need and why each is crucial for your state tax return.

1. Federal Form 1040 and Schedule C: Your federal return—specifically Form 1040 and Schedule C for self-employed individuals—is the starting point for your Virginia return. The figures from these documents, particularly your Adjusted Gross Income (AGI), directly impact your Virginia income tax calculations and are required when completing your state return electronically or via paper filing. Be sure to transfer all key data accurately, especially using commercial or approved tax preparation software.

2. 1099-NEC, 1099-K, and All Other Income Tracking: Self-employed individuals often receive multiple 1099 forms—1099-NEC for contractor income and 1099-K for platform payments (like Stripe, PayPal, or Uber). These forms must be reported on your Virginia tax return for 2023 to ensure proper income tax calculation. Missing even one source may trigger a state audit or delay processing your return or direct deposit.

3. Expense Records, Receipts, and Business Documentation: Every eligible deduction you can document with receipts or logs—such as home office supplies, mileage logs, or software subscriptions—can reduce your individual income tax liability. These are especially important for sole proprietors filing Schedule C. Organizing these records before using tax preparation software or accessing free online filing options helps streamline the return process and avoid errors.

4. Estimated Payments and Prior Year Returns (Confirm What You've Already Paid): If you made quarterly Virginia estimated tax payments during the 2023 tax year, you’ll need documentation showing dates and amounts paid. This ensures you get full credit for tax paid and helps avoid underpayment penalties. Prior year returns are also valuable for reference when completing the general filing information or verifying carryovers, like losses or credits on your current state return.

5. Return-Specific Tools: Calculators, Forms, and Digital Access: Before beginning, access calculators, forms, downloadable return tools, and instructions through the Virginia Department of Taxation. Fiscal year filers should pay close attention to which tax year their records apply to, especially if the due date or date falls outside the standard calendar year. Whether you opt for paper filing or submit your return electronically, verify the presence of the Virginia branding bar, cardinal logo, or close branding bar icon to ensure you're using the official portal or state-approved software.

Preparing these documents before you start your Virginia income tax return can save you time, reduce errors, and help you avoid missing the filing deadline—especially if the due date lands on a weekend or business day holiday. Whether you’re requesting direct deposit or planning to file with free tax services or commercial tax preparation software, organized preparation is key to an accurate and stress-free tax season.

Calculators, Forms, and Tools for Estimating Your Income Tax

Estimating your Virginia income tax accurately is essential for staying compliant and avoiding surprises at tax time—especially if you're self-employed. Fortunately, the Virginia Department of Taxation and the IRS provide official tools and resources to help you calculate your debts and prepare your filing confidently. Here's what you need to know:

1. Use the Virginia Tax Calculator for Preliminary Estimates: The Virginia Department of Taxation provides a free, interactive income tax estimator explicitly designed for residents, including sole proprietors and freelancers. This tool gives you a ballpark estimate of what you may owe based on your filing status, estimated income, and standard or itemized deductions. It’s ideal for planning estimated payments or checking how life changes (like marriage or starting a business) may affect your taxes.

2. Refer to IRS Tools for Federal Income Context: Since Virginia uses your federal adjusted gross income (AGI) as the starting point for state tax calculations, using the IRS Tax Withholding Estimator can help you project your federal liability accurately first. This ensures you enter the correct AGI on your Virginia return, which is especially important for sole traders filing Schedule C.

3. Download the Right State Forms and Instructions Early: Access the official Virginia forms and instructions from the Department of Taxation’s website to avoid delays or errors. For self-employed individuals, this typically includes Form 760 (resident return) or Form 763 (nonresident/part-year), schedule OSC for out-of-state credits, and Form 770ES if you need to make estimated payments. The site also offers fillable PDFs and a tax calendar.

4. Bookmark the Virginia Tax Payment and Refund Portals: Once you’ve calculated your liability, use Virginia’s “Online Services for Individuals” portal to pay taxes, check your balance, or track refunds. This portal also provides account history and payment confirmations, which help manage multiple estimated payments throughout the year.

5. Consider Using Approved eFile Software with Built-in Tools: Several Virginia-approved e-file vendors (e.g., TaxSlayer, FreeTaxUSA, and TurboTax) offer built-in calculators and deduction finders. These platforms automatically apply state-specific rules, like the Virginia standard deduction or eligible credits for self-employed individuals. Be sure the provider supports Schedule C integration and Form 770ES, especially if you operate a sole proprietorship or single-member LLC.

Estimating your Virginia income tax can help you avoid underpayment penalties and stay ahead of deadlines. With these official tools and reliable resources, you can take control of your tax planning and file with greater accuracy and confidence.

Completing Your Federal Return Before Your Virginia Income Tax

Completing your federal tax return is crucial before filing your Virginia state tax return as self-employed. Doing so sets the financial foundation for your state filing and ensures the figures on your Virginia return align with IRS-reported income. Here's why this step matters:

• Federal Return Sets the Benchmark: The Virginia Department of Taxation uses your federal adjusted gross income (AGI) as the starting point for calculating your state tax liability. Your AGI determines eligibility for deductions, credits, and income thresholds on your Virginia return. Your state numbers may be inaccurate or rejected without a finalized federal return.
  
  
• AGI Drives State Tax Calculations: Your federal AGI flows directly onto Line 1 of your Virginia Form 760. Many Virginia-specific deductions and credits—such as age deductions, social security subtractions, or standard vs. itemized deductions—are calculated as adjustments to your federal AGI. If your AGI changes after state filing, you’ll likely need to amend your return.
  
  
• Accuracy in Data Transfer Prevents Penalties: Virginia forms require you to transfer multiple figures from your IRS Form 1040 and Schedule C (or Schedule F, if applicable), including total income, net self-employment income, and taxable amounts. Transposing incorrect data—such as misreporting self-employment income or omitting federal withholding—can trigger audits or processing delays.

Completing your federal return first ensures consistency between your state and federal filings, reducing the risk of errors, amended returns, or penalties.

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Deductions and Credits for Self-Employed Filers in the Virginia Tax Return for 2023

If you're self-employed in Virginia, understanding the deductions and credits available on your 2023 state tax return can significantly reduce your tax liability—but only if you know which options apply to your unique situation. Here’s a breakdown of key deductions, subtractions, and credits specifically relevant to freelancers, contractors, and small business owners filing in Virginia:

• Choosing Between the Standard Deduction and Itemizing: Virginia offers a standard deduction of $8,000 for single filers and $16,000 for married couples filing jointly in 2023. However, self-employed individuals with significant deductible expenses—such as high medical bills, mortgage interest, or substantial charitable contributions—may benefit more from itemizing deductions. If you itemize on your federal return, you must also itemize on your Virginia return, and vice versa.
  
  
• Understanding Subtractions from Income (Not the Same as Deductions): Virginia allows certain income subtractions that directly reduce your Virginia Adjusted Gross Income (AGI). For self-employed filers, this could include:
  
  
  
  • Military Benefits—Taxpayers under age 55 can subtract up to $20,000 of military retirement income; the limit increases to $30,000 for those 65 and over.
    
    
  • Virginia 529 Plan Contributions—Up to $4,000 per account annually, potentially more if you carry forward excess amounts.
    
    
  • Self-Employed Health Insurance Deduction—While typically claimed on your federal return, this deduction reduces your Virginia AGI if properly reported.
    
    
  • Disability Income and Social Security—Depending on age and income level, portions may be eligible for subtraction.
    
    
• Targeted Credits That Offset Your Virginia Tax Bill: Credits reduce your actual tax owed, not just your taxable income. For self-employed Virginians, these may include:
  
  
  
  • Education Improvement Scholarships—If you contribute to an approved scholarship foundation, you may claim a credit worth 65% of your donation.
    
    
  • Food Crop Donation Credit—Farmers or food producers who donate to a nonprofit food bank may qualify for a credit equal to 30% of the donation’s fair market value (up to $5,000).
    
    
  • Worker Training Tax Credit—If you paid to upgrade your or your employee’s skills through approved noncredit training, you may qualify for this employer-focused credit.
    
    
  • Recyclable Materials Processing Equipment Credit—If your business involves manufacturing or recycling, this can offer significant tax offsets.

Being strategic with your Virginia deductions and credits can make a notable difference in how much tax you ultimately owe—or how much you get back. Just be sure to retain clear records and, when in doubt, consult a tax professional familiar with Virginia’s unique self-employment provisions.

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Estimated Payments and Filing Information for Self-Employed Virginians

If you're self-employed in Virginia, understanding when and how to make estimated tax payments is essential to stay compliant and avoid costly penalties. Here’s a clear breakdown of what you need to know when managing your tax responsibilities throughout the year:

• Estimated Tax Payment Requirements in Virginia: Self-employed Virginians—such as sole proprietors, freelancers, or independent contractors—must make estimated tax payments if they expect to owe more than $150 in state income tax after subtracting credits and withholdings for the year. This applies whether you earn income through a small business, gig work, or consulting.
  
  
• Key triggers for estimated payments include:
  
  
  
  • No tax is withheld from your income (e.g., 1099-NEC or 1099-K work).
    
    
  • You had a significant tax bill last year and expect similar income.
    
    
  • You started a business or freelance work mid-year with no withholding.
    
    
• How to Calculate and Submit Form 770ES (Estimated Tax Payments): To calculate your estimated payments accurately:
  
  
  
  • Start with your federal Adjusted Gross Income (AGI) and make Virginia-specific adjustments.
    
    
  • Use the Form 770ES worksheet provided by the Virginia Department of Taxation to project your total tax liability for the year, then divide it into four quarterly installments.
    
    
• Submission Process:
  
  
  
  • Payments are due May 1, June 15, September 15, and January 15 of the following year.
    
    
  • You can pay online using the Virginia Tax online services portal or mail in Form 770ES with a check or money order.
    
    
  • Keep copies of all payment confirmations or canceled checks for your records.
    
    
• How to Avoid Penalties for Underpayment: Virginia imposes penalties if you fail to pay at least 90% of your total tax due for the year through a combination of estimated payments and withholding.

To stay penalty-free:

• Pay equal installments each quarter if your income is stable.
  
  
• If your income is seasonal or varies (as with gig workers), use the annualized income installment method on Form 760C to align payments with earnings.
  
  
• Consider overpaying slightly if you're unsure—interest and penalties on underpayment can add up quickly.

Staying ahead of estimated tax obligations means more than just avoiding penalties—it gives you greater control over your business finances and peace of mind during tax season. Always keep detailed records, and consult a tax professional for help with Virginia-specific filing nuances when in doubt.

Filing Options and Approved Tax Preparation Software for Self-Employed Filers

If you’re self-employed in Virginia and preparing your 2023 tax return, choosing the proper filing method and software can save you time, reduce errors, and help ensure you comply with federal and state requirements. Below is a breakdown of your filing options, the benefits of e-filing, and how to submit your return accurately and confidently.

• Why E-Filing Is a Smart Move for Self-Employed Virginians: Electronic filing offers faster processing, automatic error checks, and quicker refund timelines. For self-employed taxpayers managing multiple income sources (like 1099-Ks or Schedule C income), e-filing helps streamline calculations, flag inconsistencies, and ensure real-time access to Virginia’s online services.
  
  
• Approved Software That Meets Virginia Department of Taxation Standards: Virginia provides a list of officially approved e-file vendors, including TurboTax, TaxSlayer, FreeTaxUSA, and H&R Block. These programs are designed to support complex returns, including business income, deductions, and estimated payments. Before selecting a platform, check that it supports Form 760 (individual) and integrates well with federal Schedule C forms.
  
  
• The Pros and Cons of Paper Filing vs. E-Filing: Paper returns might appeal to those who prefer physical documentation, but they carry a higher risk of manual errors and longer processing times (up to 8–12 weeks). E-filing, on the other hand, allows immediate confirmation of receipt and is typically processed within 1–3 weeks. If you’re claiming business expenses or applying credits, digital submissions offer clearer audit trails.
  
  
• Steps to Ensure Accurate Submission and Payment Confirmation: Double-check all Social Security numbers, bank account info (for refunds), and figures transferred from federal returns. Use secure platforms or the Virginia “Where’s My Refund?” tool to track your submission. If paying by mail, include Form 760-PMT and verify delivery via certified mail. Always keep your transaction ID and confirmation email handy when making payments online.

Ultimately, selecting a reliable tax filing method—and understanding how each tool fits your self-employment scenario—can mean the difference between a smooth tax season and a costly mistake. Always compare options based on the complexity of your income and the support features offered.

FAQs

Filing requirements if income is below the threshold

Even if your self-employment income falls below Virginia’s filing threshold, you may still benefit from filing a return. For example, filing allows you to claim a refund if you had state tax withheld or made estimated payments. Additionally, you may qualify for credits that reduce your liability. Filing helps maintain excellent tax records and avoids complications later. Review current thresholds on the Virginia Department of Taxation website or consult a tax professional.

Claiming deductions like home office and business expenses

Virginia generally follows federal tax law for calculating business income. If you’re self-employed, you can deduct eligible expenses like a home office, mileage, equipment, and internet—claimed on Schedule C of your federal return. These deductions reduce your adjusted gross income (AGI), which transfers to your Virginia return. Ensure expenses are ordinary, necessary, and well-documented. Only the business-use portion of mixed-use items can be deducted to remain compliant with IRS rules.

Handling multi-state income

You may need to file multiple state returns if you earned self-employment income in more than one state. Virginia residents must report all income, regardless of source, but you may claim a credit for taxes paid to another state to avoid double taxation. Nonresidents or part-year residents must only report Virginia-sourced income. Rules can be complex, especially with remote work or traveling gigs, so consult Virginia’s instructions and the other state’s tax guidelines carefully.

Joint returns with W-2 spouse

You can file jointly in Virginia if you're self-employed and your spouse has W-2 income. Filing jointly often results in lower taxes due, as you can combine deductions and qualify for higher income thresholds or credits. Your spouse’s W-2 and self-employment income are included in the total household income. Include all income types and maintain documentation for both filers, including business expenses and withholding details.

Late payment or nonpayment consequences

Penalties and interest will accrue if you owe Virginia income tax, miss the filing deadline, or don’t pay in full. The late payment penalty is typically 6% per month (up to 30%), plus interest on unpaid amounts. Failure to file can result in additional penalties. Estimated tax underpayments may also trigger penalties. Filing on time—even if you can’t pay in full—helps reduce penalties. You may request a payment plan through the Virginia Tax website.