It’s Cell Phone Courtesy Month! Is Phone Use Tax Deductible?

1800 Accountant writes: These days, everyone has a cell phone. Not only that, most people have smartphones. These incredibly powerful mobile devices are attached to us like an extra limb. July marks National Cell Phone Courtesy Month. This means we should all take a closer look at when, where, and how we are using our cell phones in order to be courteous around others so that we aren’t talking, texting, or playing games at inappropriate times. On a related note, are cell phones and cell phone use considered an IRS tax deduction?

What You Can Write Off

Much like other common expenses incurred by self-employed professionals and small business owners, cell phones and phone-related expenses do qualify as an IRS tax deduction if they are directly related to performing work or business activities. This beneficial tax write-off includes both cell phones and landlines used for these purposes. The deduction also encompasses talk/minute plans, texting packages, and data plans for mobile Internet access.

Claiming This Deduction

In basic terms, the percentage of time spent using a cell phone for business-related reasons can be claimed as a deduction on your tax return. Let’s say you use your cell phone 50 percent of the time for business phone calls, texts to partners, or for data use when browsing the web. You can then write off 50 percent of your phone bill as a business expense when filing your taxes with the IRS. If you have a separate cell phone that you specifically utilize for your small business, your entire bill for this phone qualifies as a deductible business cost. In addition, remember that the purchase price of a brand new cell phone can be claimed by calculating the percentage of time you spend on the phone for work and then multiplying this percentage by the price of the phone. For example, if you buy a $100 phone and use it 70 percent of the time for business, you can write off $70 of the purchase price, along with the costs of your phone plan related to business use.

Simplifying the Deduction Calculation

To simplify the calculation of your cell phone deduction, it is recommend that you request itemized statements from your phone service provider. These statements would appear in the form of a monthly log of all the calls you make, along with the length of each phone call. This information can greatly assist you to determine the amount of time you spent making or receiving business calls in a month, particularly if you use a cell phone for both personal and business purposes. Another option is to simply estimate how much time you spend utilizing your phone for business purposes each month and then calculating the percentage of your total phone bill.

Deductions for Landline or VoIP Phones

While landline phones have become much less prevalent in recent years, they remain a staple for many small businesses in office complexes. Voice-over IP phones (VoIP), which are Internet-based phones, are also popular in the business world nowadays. Landline or VoIP phones used for business purposes qualify as a business expense, according to the IRS. Just like cell phone costs, these expenses can be written off as a tax deduction as well. Because most phone companies offer unlimited minute plans for these types of phones, it makes the deduction calculation process quite simple.