These days, cell phones are pretty much essential for work. Whether you're checking your Slack messages, calling a client, or navigating to an Uber passenger, odds are good that you use your mobile device for business at least part of the time.
Still, freelancers, small business owners, and self-employed people often forget to deduct their cell phone bills on their taxes. That's because they tend to use their phones for business and personal purposes, and that's all bundled together into one monthly bill.
Here's how to get around that problem and write off your cell phone bill as a work expense.
Can much of your cell phone bill can you deduct?
In most situations, your cell phone bill is only partially deductible, because you'll use it for personal reasons at least some of the time.
It's very similar to deducting computer expenses: you can only write off your business-use percentage. That means that, if you use your phone for work 60% of the time, you'd be able to write off 60% of your phone bill.
Of course, if you buy a separate mobile phone and cell phone plan for business use only, that would be 100% tax-deductible. (The same goes for a landline in your home office that you only use for phone calls to business contacts.)
For most freelancers and independent contractors, I don't actually recommend getting a separate work phone. It would require you to spend hundreds of extra dollars per year — meaning less money in your pocket even with the write-off. However, getting a separate cell phone for business could make sense, if you see your business calls as a distraction to your personal life.
Deducting business use of your cell phone
The time you spend taking personal calls and browsing social media for leisure has to be separated out from your business use of your phone. That requires, essentially, prorating your cell phone bill to account personal usage.
Figuring out your business-use percentage can be challenging, since the split between your personal and business usage might vary from week to week. That said, the IRS does require you to limit your cell phone tax write-off to the business-use portion only. Let's go through an example of how to do this.
Figuring out the business-use percentage of your phone
Let’s say I use my phone for business purposes from 9 AM to 5 PM Monday through Friday. That’s 40 hours per week. Let’s say my normal waking hours are 8 AM to 10 PM — 14 hours a day.
First, I'll take my 14 waking hours per day and multiply it by seven to get my total waking hours per week. That comes up to 98 hours. Then, I'll divide that by the 40 business hours I keep per week. That gives me a percentage of about 41% business use and 59% personal use.
If my phone bill is $100 per month, I can take a tax deduction of $41 per month, or $492 per year.
This same calculation can be applied to other expenses that you use for both business and personal purposes, like your internet bill.
Deducting the cost of a new phone
Now you know how to deduct the business portion of your phone bill. But what if you bought a brand-new phone and want to use it for work at least some of the time?
Cell phones were formerly considered "listed property," a type of property used for business and personal purposes that the IRS subjects to special rules. As of 2011, this is no longer the case. That means there's no need to keep ultra-detailed logs on your cell phone usage, on a call-by-call level, in order to claim it as a write-off.
Just keep in mind that, as with your monthly bill, you can only write off the business-use percentage of a phone purchase.
Using the de minimis safe harbor election
The de minimis safe harbor election allows you to write off business equipment costing less than $2,500 — including cell phones — in the first year you use it for work.
This method of deducting a cell phone’s purchase price is very simple, since you don't have to calculate depreciation. You'll just have to include this election with your tax return. (Since it doesn't carry over between tax years, you'll have to make it every year).
Deducting your family plan
You can also deduct the portion of your family plan that you use for work.
The easiest way to do this is to get an itemized version of your monthly cell phone bill. This will allow you to determine which charges are directly related to your cell phone, which are associated with your family members. 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.
Deducting cell phone expenses on a business trip
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.
Deducting cell phone accessories and apps
Some freelancers and independent contractors end up spending on other phone-related purchases for their work. A rideshare drive's work purchases, for example, might include a phone mount to keep their phone in view while they're navigating. An influencer's purchases, meanwhile, can cover ring light that they clip their phone to during filming.
Phone accessories like these are 100% tax-deductible if you use them exclusively for work. The same goes for any mobile apps that you bought or subscribed to for business reasons, from mileage trackers to receipt scanners.
How to document your cell phone write-offs
It's important to have good records for every write-off you take. However, don’t overthink it and let that requirement scare you away from taking legitimate deductions. 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, 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:
- Evidence of your monthly cell phone charge, and
- Indication of the split between your business and personal use
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.
Make sure to digitize this document, so you don’t have to retain the physical piece of paper.
Where to deduct your cell phone bills
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.
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