These days, people are attached to their phones like they are literally part of their bodies. Whether we are talking on them, texting on them, surfing the Internet, or playing one of those addicting games, it’s hard for most of us to be without our phones. Because these devices are so important to us, you may be asking yourself whether the expenses related to phones can be claimed as an IRS tax deduction. Bert Seither, who helps small business owners succeed, explains how this deduction works.
Much like other costs commonly incurred by self-employed individuals and small business owners, phone-related expenses qualify as a tax deduction if they are directly related to conducting business activities. This deduction can include both landline phones and mobile phones. It can also encompass talk plans (by the minute), texting plans, and data plans for Internet access. In general, the percentage of time someone spends using a phone for business purposes can be claimed as a tax write-off.
Consider this example: If you use a cell phone 60 percent of the time for business reasons, you can write off 60 percent of your phone bill when filing your taxes. If you have a phone that is specifically utilized for business purposes – meaning 100 percent of the time you spend on it is related to business activities – the entire bill qualifies as a business expense and can be deducted for that reason. Additionally, the purchase price of a phone can be claimed by calculating the percentage of time you spend on the device for business and then multiplying this percentage by the original cost of the phone. For example, if you spend $100 on a phone and use it 50 percent of the time for business purposes, you could deduct $50 of the purchase price, along with the bills you receive each month for usage.
How to calculate this deduction
When it comes to deducting phone expenses, Bert Seither says a simple way to make calculations is to request itemized statements from your phone service provider. This means getting a monthly log of each call you make and the length of each call. This information can greatly help you determine exactly how much time you spent making business-related calls and personal calls. This typically applies to those who don’t have an exclusive business phone. If you can’t get this specific information, the best thing to do is to estimate how much time you spent throughout the year using the phone for business tasks.
Even though the “old” landlines are becoming much less prevalent these days, they are still part of many businesses and offices. Landlines used at brick-and-mortar office complexes or in home offices also qualify as a business expense, and these costs can be written off. Since many phone companies offer unlimited minute plans for landlines nowadays, it’ should be fairly easy to deduct the expenses for these types of business phones.
Phone expenses incurred for business purposes are just one category of the numerous costs that can be written off. Bert Seither says it’s critical to find out about all relevant tax-saving opportunities that can assist in your efforts to hang on to as much of your hard-earned income as possible.