How to Calculate and Claim Cellphone Tax Deductions

Table of Contents

Can a Business Deduct Phone Expenses From Taxes?

The use of a cellphone is now considered a legitimate, tax-deductible business expense because they are now just as essential to business as a landline. However, since most of us use our cellphones for personal purposes as well, the IRS closely examines this deduction to ensure that personal electronics use is not being claimed as a business expense when it should not be .

Self-employed individuals, small business owners, and freelancers frequently overlook the tax deduction for their cell phone expenses. This is due to the fact that they frequently use their phones for both personal and professional reasons, with a single monthly bill for both.

How Much Of My Cellphone Bill Is Deductable ?

Because you are likely to use your mobile phone for personal purposes at least some of the time, your cell phone cost is only partly deductible in the majority of circumstances.

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It’s pretty similar to how you deduct the cost of your computer, in that you may only write off the proportion of the price that goes into your company. Therefore, if you use your phone for work sixty percent of the time, you will be eligible to deduct sixty percent of the cost of your monthly phone bill.

Purchasing a mobile phone and a cell phone plan specifically for usage in one’s company is, of course, an expense that may be deducted in its whole from one’s taxes. (This is also true if you have a landline at your home office that you solely use to make calls to people in your professional network.)

Finding out what percentage of your time is spent on business activities may be difficult since the proportion of your time spent on personal and professional activities might shift from week to week. Having said that, the Internal Revenue Service mandates that you may only deduct the percentage of your mobile phone bill that is related to business usage.

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Can I Deduct The Cost of a New Phone or Device ?

In the past, mobile phones were categorised as “listed property,” which is a kind of property that may be used for both commercial and personal reasons and is subject to a different set of regulations from the IRS. This is not the case any more as of the year 2011. This indicates that you do not have to maintain very thorough records on your mobile phone use, on the level of a call-by-call basis, in order to claim it as a tax write-off on your income tax return. Just bear in mind that, just as with your monthly payment, the only portion of a phone purchase that may be deducted is the portion that is used for business.

Can I Deduct Depreciation Off My Phone Cost ?

The short answer is yes, If you used your mobile phone for business purposes less than fifty percent of the time, the only method of depreciation available to you was a simple straight-line method that lasted ten years. In contrast, the new legislation eases the process of claiming bonus depreciation and allows you to write off depreciation over a period of seven years. Depreciation is the process of spreading out the cost of an asset over the course of its useful life.

Further Reading : TaxAct vs TurboTax vs H&R Block – Which Is Better In 2022

Can Self Employed People Write Off Cellphone Costs Against Tax ?

If you use your mobile phone only for work-related purposes, you may be able to deduct some or all of the costs associated with your mobile phone use from your taxable income. There is no specific mobile phone deduction available via the IRS for persons who are self employed. On the other hand, you may be eligible to deduct some extra costs incurred by your company. See all our top tax software deals for huge savings

I have a personal phone plans with T Mobile and also use it for some business monthly. The easiest way to determine the usage ratio was just to check my weekly screen time totals and calculate the percentage of use solely for business purposes vs personal purposes and record this incase I am ever audited .

If you use a personal mobile phone for business purposes, the standard monthly expenditure that you pay for that phone will not be tax deductible. In order to take a tax deduction for the expenditure, you will need to determine the proportion of each month that the cell phone was used for business purposes.

What If My Employer Provides a Mobile Phone?

An employee receives a taxable benefit in the form of a mobile phone that is given by their employer. The value of this benefit, which includes the employee’s share of the monthly fees for using the phone as well as the cost of the phone itself, is taxable to the employee. Unless it can be shown that the phone is used mostly for commercial reasons, this will be the case. The use of a mobile phone by an employee, whether for work or personal purposes, is considered a non-taxable fringe benefit, provided that the employee is provided with a cell phone by their employer for business purposes. Even more crucially, you won’t have to retain any records of the business reasons behind this transaction in order to qualify for this tax-free status.

Can I Claim Work-related Phone Calls On My Personal Cellphone ?

If you use your own cell phone for both personal and professional purposes, you may only deduct the percentage of time spent on the phone that is directly relevant to your job. You will first need to determine the proportion of time spent on business-related calls, and then multiply that number by the total cost of your real mobile phone use. You are also need to retain records of those charges in order to demonstrate that use.

If you do use your mobile phone for business, however, the typical monthly expenditure that you incur will not be eligible for a tax deduction. In order to take a tax deduction for this expenditure, you will need to determine the proportion of each month that the cell phone was used for business purposes.

Different rules apply to the business use of a personal mobile phone vs the use of a cell phone given by the employer when it comes to taxes.
If you are self-employed or fall into specific categories, you may be eligible to deduct a percentage of the cost of your personal mobile phone bill for business-related calls you make.
It is possible for an employer to deduct the cost of providing a mobile phone to an employee if it can be shown that the phone is mostly used for business purposes. This is known as a fringe benefit.

How To Reduce Cellphone and Mobile Bills

Here at MydealsClub we are all about saving our customers and members money . Here are some little known facts

Wireless prices have dropped 45% from 2010 to 2019.
Taxes, government fees and the cost of mandates can add up to 20% to your Verizon wireless phone bill. The national average is 14%. Too darn high.
Nationally, other consumer goods and services average only 6%.
Today there are more than 100 legislative proposals pending in states around the nation that will result in still higher wireless bills.

Register Your Opposition To Higher Wireless Taxes

The Cellular Telecommunications Industry Association has set up a consumer advocate working group to fight to maintain the privacy of wireless users and provide them control over their bills and unwelcome calls. Top companies like Verizon Wireless , T-Mobile have previously launched Anti-Tax campaigns to help consumers advocate for lower phone bills . Visit our contact page to learn more about how to get involved.

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