If, however, you work as a painter and decide to claim a deduction for your entire annual cell phone expenditure based on a half-dozen, business-related calls you made, the IRS could come to conduct an audit.
Hence why understanding the industry in which you operate is crucial to being able to accurately forecast your odds of successfully claiming a cell phone deduction. Ideally, the IRS would want you to keep your personal and business assets separate. In reality, however, they recognize that most people are not going to own two cell phones just so they can make it easier on themselves during tax season.
This is why millions of Americans still continue to go back to the percentage-of-use deduction that is very similar to the home office deduction. If you need a cell phone for your business and use it on a consistent basis while also using it outside of work for personal reasons, you will still retain the right to deduct a portion of the expense related to the business use. The other half is a personal expense that cannot be claimed on your taxes just like you cannot claim the parts of your home that do not relate to your home office.
In the meantime, your employer will also be able to take full advantage of this on their own taxes as they will get to claim the entire deduction as a business expense since they are paying to provide you with a phone plan that helps you fulfill your job-related duties. If you can prove that you carry a personal cellphone during business hours and make all your personal calls on that, the IRS may decide the business phone is purely for business, in which case it won't affect your income.
TurboTax Self-Employed uncovers industry-specific deductions. Some you may not even be aware of. Find more tax deductions so you can keep more of the money you earn with TurboTax Self-Employed.
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Deducting Cell Phone Use. By Jean Murray. Learn about our editorial policies. From there, you can split up the shared charges — like sales taxes and fees — between everyone on the plan. After you've figured out your individual cell phone's cost using your itemized bill, you can split that between your business and personal use, like in the example we went through above.
There's one other thing to keep in mind when it comes to deducting a family plan: you can only deduct cell phone expenses that you personally pay for. So if a family member is paying for your cell phone and you're not reimbursing them, you wouldn't be able to write off that cost. If you ever travel for work , you might find yourself spending a little more than usual on your phone bill — say, because of roaming charges.
These extra, trip-related fees are considered a business expense and are fully tax-deductible. The same goes for other communications expenses you end up incurring over the course of your business trip, including long-distance calls from your hotel room, hotspots, and internet access while you're on a plane. Some freelancers and independent contractors end up spending on other phone-related purchases for their work.
A rideshare driver , for example, might invest in a phone mount to keep their phone in view while they're navigating. An influencer , meanwhile, might buy a ring light they can clip their phone to during filming. The same goes for any mobile apps that you bought or subscribed to for business reasons, from mileage trackers to receipt scanners.
It's important to have good records for every write-off you take. If you want to claim business use of your cell phone, the actual documentation requirements are pretty straightforward.
To deduct phone expenses like travel costs, accessories, and apps, your credit card and bank statements should suffice. To make things easier, you can even use Keeper Tax , an app that will automatically track and record business expenses like these.
Keeping records for your phone bill itself is slightly more involved — you'll have to account for, not only the cost, but also your personal use of the cell phone. Essentially, your documentation for your cell phone bill should include:.
In practice, a super simple way to put this documentation together is to take your cell phone bill, print it out, and write your business-use percentage calculation on it.
As a freelancer or independent contractor, the IRS requires you to add Schedule C to your tax return. You'll use this form to report all your business income — as well as any business expenses you write off, from your home office expenses to your cell phone bill. Kristin Meador is a Certified Public Accountant with over 5 years experience working with small business owners and freelancers in the areas of tax, audit, financial statement preparation, and profit planning.
Kristin is an advocate and affiliate partner for Keeper Tax. Keeper Tax automatically finds tax deductions among your purchases. Note: at Keeper Tax, we're on a mission to help freelancers overcome the complexity of their taxes. That sometimes leads us to generalize tax advice. Please reach out via email if you have questions. Get started.
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