If you’re like most Americans, you have a cell phone and you use it for business at least some of the time. These pocket-sized devices don’t come cheap, though. Read on to learn how to deduct cell phone bills on your taxes.
When are cellular services tax deductible?
You probably bemoan paying cell phone bills each month because it can eat into your bottom line. Uncle Sam does allow you to deduct qualifying cell phone service expenses as business expenses. Your cell phone bill is qualifying if it’s connected with your trade or business. Your personal usage of cell phone services is not deductible business expenses.
Keep adequate records
The IRS scrutinizes claims for sizable cellular service expense deductions. This is because it’s quite easy to mix business and personal use of a cell phone.
So, it’s prudent to keep proper records of business cell phone bills beyond just the gross amount you were charged. For example, an itemized phone bill gives a complete picture of which costs go with which purpose.
You can also rely on the separate call logs or other metrics your cellular service offers. These records can either bolster your deduction claim or negate it if the evidence provided does not support the claim.
These records do not, in themselves, justify deducting the full cost of the bill. You can only deduct the business-use percentage of your cell phone bill. So, if 50 percent of your cellular usage was for business you can deduct that amount of the cell phone bill.
How to deduct cell phone costs without worry: Keep separate phones
It’s tough to separate business cell phone usage from personal usage when you’re using one device for both purposes. So, if you already have a cell phone for personal use, consider getting a second cell phone that’s only for business. Having two cell phones will enable you to clearly delineate business-related calls and personal calls and make a stronger claim of a deduction for business cellular service use.
For more deductible business expenses, see IRS Publication 535.
MileIQ’s blog does not constitute professional tax advice. You should contact your own tax professional to discuss your situation.