cell phone deductible as business expense?

[kelleyrn2000]

I'm currently expanding my direct sales business, which is secondary to my part-time nursing job. I have had to replace my cell phone twice this year (no insurance) but we are currently using a prepaid phone plan. I was considering going to a monthly plan for when I have more sales business and need to spend more time texting/phonecalls.

My question is, if I itemize my taxes, and deduct my business expenses on my tax return, would I be able to deduct the cost of the phones I had to replace? Would I recoup a certain percentage of my cell phone bill? The cell phone would be used about 50/50 for business/personal. TIA!!

 

[kaytieeldr]

You want to talk to a tax adviser, or read IRS information on this (see www.irs.gov) but since it's not 100% for business, I'm going to say "no".

 

[Swimalie]

I own my own business and use a tax preparer. With her, I have to tell her what percentage of my cell phone (house usage, too) is used for business purposes and which is used for personal. Only that business percentage can be listed on taxes.

 

[kaytieeldr]

Do you have to keep records to back up what you tell your tax preparer, Swimalie, in case of questions or an audit?

 

[SarahKate]

Yes, you can claim the percentage that you use for business. It's not an exact science, and my tax person just takes my best educated estimate. Definitely keep records along with your other receipts and business expense documentation.

I think the rule is that if you don't have a landline and you only have a cell phone, you have to do a percentage (since it's almost impossible that ALL of your calls would be business-related). If you have a landline and a cell phone, you can't deduct the landline but you can deduct cell phone expenses.

Of course, definitely consult with a tax advisor, but that is what I have read and interpreted.

 

[Swimalie]

Do you have to keep records to back up what you tell your tax preparer, Swimalie, in case of questions or an audit?

Yes. I get my calls itemized on my bill and keep those bills for 7 years in case of an audit. I also take the percentage and then lower it just to cover my backside!

 

[Cheshire Figment]

The basic rule is you first telephone line, including related taxes, is personal. If you have more than one line, then the additional lines may be all business.

If your long distance calls are listed on your bill, then any business long distance calls on the first line (and the related taxes) are deuctible.

Mike (CPA)

 

[Swimalie]

One thing I did on our house in Oregon is have a 2nd phone number. It was only $4 more a month and with 2 phone numbers coming in to the house. The normal ring meant it was a business call. The European ring style (2 short rings) meant it was the 2nd phone number we got and was a personal call. Then I was able to deduct the main phone expenses more easily, too.

 

[Green Tea]

My spouse has a smart phone provided by his employer. He really just uses it for work. But on his pay "stub" each month, the cost of the phone part is taxed as income. The rules for that changed in the last year or two. I think the data part is not taxed though.

 

[wmharley]

When I was a REaltor, I claimed the new phones and my upgraded line (not the rest of the family lines) as business as the reason I had to upgrae was due to the business. However, since I claimed home office, everything else was calculated as a percentage.

I never claimed entertainment expenses though in all my years.

 

[SarahKate]

It's up to you to determine the percentage of calls that are used for business use and you use that for your deduction.

Example: My bill is about $80 a month. I estimate that I use the phone about 70% for business. So I calculate that about $56 of my monthly bill is deductible and that's what I use for taxes.

It's the exact same concept of using your home as a place of business. You estimate what % of your home is used for the business. Then you take your mortgage, utilities and things of that nature and you can deduct that % of those costs.