If you use your cell phone to run your business, you may be wondering if you can deduct your phone bill on your taxes.
In many cases, you may be able to deduct the business portion of your cell phone expenses. The important part is separating business use from personal use and keeping good records.
Here are some of the basics you should know.
When Can a Cell Phone Be a Business Expense?
Your cell phone may qualify as a business expense when you use it for ordinary and necessary business activities.
For example, you might use your phone to:
- Call or text customers
- Answer business emails
- Schedule appointments
- Communicate with employees
- Manage business social media
- Take business-related photos
- Use business apps
- Accept payments
- Communicate with vendors
The phone doesn’t necessarily have to be used only for business. However, personal use generally isn’t a business deduction.
Can I Deduct My Entire Phone Bill?
It depends on how you use your phone. If you have a phone that is used exclusively for your business, the eligible business expense may be easier to determine.
However, many small business owners use the same phone for both business and personal purposes. In that situation, you generally need to determine the portion related to your business.
For example, if you reasonably determine that 60% of your phone use is for business, you may be able to deduct the business portion rather than 100% of the bill. Your actual deduction will depend on your specific situation.
What If I Use My Personal Phone for Work?
You don’t necessarily need a separate business phone to have a deductible business expense. If you use your personal cell phone for legitimate business activities, the business portion may still qualify.
This is common for freelancers, independent contractors, real estate professionals, delivery drivers, photographers, and small business owners who use one phone for everything.
The important thing is having a reasonable way to separate personal and business use.
Keep Records of Your Cell Phone Expenses
Keeping good records can make it easier to support your business deductions. Save your monthly cell phone bills and records showing what you paid. You should also be able to explain how the phone is used for your business and how you determined the business portion of the expense.
Don’t simply claim your entire phone bill as a business expense when the phone is also heavily used for personal calls, messages, entertainment, and other personal activities. Accurate records can help you claim the appropriate business expense.
Local Tax Can Help With Your Business Deductions
Business deductions can become confusing, especially when an expense is used for both business and personal purposes.
Local Tax can help you understand which expenses may qualify as business deductions.
We can review your cell phone expenses along with other business costs and help determine how they should be reported on your tax return.
Whether you’re self-employed, an independent contractor, a freelancer, or a small business owner, understanding your eligible expenses can help you avoid overlooking potential deductions.
Local Tax
9429 Somerset Blvd
Bellflower, CA 90706
(562) 925-2203
Contact Local Tax if you have questions about cell phone expenses, business deductions, or preparing your tax return.
