Is My Telephone or Cell Phone Tax Deductible?
By Evyln Carlile & Shelly Cedarblade
The answer should be simple, you need a telephone to operate your business and therefore it should be deductible as an “ordinary and necessary” business expense. However, as you may have guessed, it is not that simple!
The IRS deductions rules state that “the cost of basic local telephone service (including any taxes) for the first telephone line you have in your home, even though you have an office in your home is not deductible.”
However, you can take the telephone deduction for the business portion of expenses associated with this first phone. Some examples of acceptable telephone deductions are:
- Long distance business calls
- Caller ID
- Answering machine
- Cost of the phone (possible if additional features needed for business)
You can deduct business expenses associated with a second phone line exclusively for your business.
Phone Tax Deduction: Bundled Package
If your telephone, internet, and cable television bill is bundled together in one bill, how do you break out the cost of your second telephone line? You will need to get pricing from your carrier to verify how much of the bill is allocated to business related shared expenses.
To determine cell phone usage you will need to get an itemized bill from your carrier to help prove business use versus personal use. Make sure to indicate business calls with client names for incoming and outgoing calls to your cell phone. Take the total business call minutes divided by total minutes used to determine the percentage of use and the appropriate cell phone deduction.
Cell Phone Deduction – Cost of Cell Phone
The cost of a cell phone is a tax-deductible business expense depending on how much you use your cell phone for business and how much you use it for personal use.
Determine the percentage of the cell phone monthly bill and add any additional expenses that are directly related to business.
Remember all expenses claimed on your tax return need to be proven by backup paper work with explanations regarding the business reason for the expense.
If you have more questions regarding the telephone deduction, the cell phone deduction, or IRS deductions in general, go to our Facebook Page and message us, or send an email request to firstname.lastname@example.org.