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Can my cell phone be a tax deduction?
Can my cell phone be a tax deduction?
Trying to find a way to justify your phone screen time? We might have the answer for you. What if we told you that you can use your phone as a tax deduction if you’re self-employed? Of course, knowing the IRS, there are some conditions you’ll have meet but we’re here to break it down for you.
Generally, you can write off the business portion of your cell phone bill and other related bills. You’ll need to keep pretty meticulous records of your usage throughout the year to do this. If you have a phone just for work, you can usually deduct the entire cost. But this deduction is also heavily dependent on your line of work.
You will report your cell phone tax deduction on your Schedule C, which is were you will report all your business income. You will file this along with your Schedule SE, where you will calculate self-employment tax, and the standard Form 1040.
Key takeaways:
- You can write off your cell phone bill as a tax deduction if you use your phone for work.
- You will need to find your business usage percentage to claim the deduction.
- If you have a phone only to use for your business, you can get a 100% tax deduction.
Table of contents
Can you write off a cell phone used for business?
If you buy a separate phone just to use for your business, you can technically claim a 100% tax deduction. But the IRS may have some questions. This is because it can be difficult to prove that your work phone has never been used for a personal reason.
If you’re checking your email on your phone and take a 5-minute break to watch a cute cat video that your friend sent you, that’s a non-work related activity that you used a work cell phone to do. So, your best bet is to calculate your business usage percentage and only write off that portion.
Most self-employed individuals can deduct a portion of their cell phone bill from their taxes if they use it for their business. Make sure that your phone is actually a necessary part of your job, otherwise you cannot claim this deduction.
So if you’re a content creator on TikTok, you may use your phone to record and post content, check emails, take business calls and even write down future ideas. You can deduct all of this from your monthly phone bill. You can use a self-employment income tax calculator to help you find relevant phone deductions. If you need to make estimated tax payments, you can use a quarterly tax calculator.
But how does the calculation work? Say you work five days a week, 9 am to 5 pm. That’s 40 hours of work per week. And let’s assume that you wake up around 7AM everyday and go to bed around 10PM. That’s a total of 105 hours per week that you are awake.
Now the tricky part. To get the business use percentage of your phone, divide 105 by 40. That gives us approximately 38% of business use and 62% of personal use of your cell phone a week. So, if your phone bill is $150 for that month, you can deduct $57 as a business expense. If your hours are the same throughout the year, that’s a $684 tax deduction just for using your phone.
If sounds this too complicated, FlyFin links your expenses, so A.I. can automatically find and classify every possible tax deduction that applies to you. You can also reach out to the team of CPAs who are experts in 1099 taxes who are available 24/7 on the app. They also prepare and file your federal and state tax returns for you.
Are there other cell phone tax deductions?
Yes, there are! You can deduct some related cell phone expenses, if they are necessary to your business. For example, if you drive for Uber, you could write off paying for Spotify as it keeps your passengers entertained. An Etsy seller can’t really make the same justification.
You can also deduct your cell phone family plan from your taxes but again, you’ll have to calculate your work percentage to claim it. But if your dad is paying for your phone, you can’t write it off at all, unless you’re reimbursing him. A freelance tax calculator is the best way you can find other deductible expenses to claim.
Is my internet tax-deductible?
A related tax deduction to cell phone usage that self-employed individuals should not forget is your internet. You can claim internet usage on your tax return whether you work from home or not, as long as it is essential to your business.
Self-employed individuals have two ways to claim this tax deduction: with the home office deduction or without. The home office deduction will require you to fill out Form 8829. You can choose the standard option or the simplified option.
With the standard option, you’ll have to calculate all your expenses related to your home office like rent and utilities. If you choose the simplified option, you can just deduct $5 per square foot of your office space. With this option, you don’t have to calculate any business usage percentages.
If you don’t want to choose the home office deduction, you can just write off your internet usage expense on your Schedule C. You can calculate your business use percentage just as you would for a cell phone. And, there are other internet-related expenses you can also write off.
The bottom line is that as long as you keep your books up to date and have proper documentation of all your activities and expenses, you should be able to take full advantage of both the cell phone and internet tax deductions every tax season.
What’s FlyFin?
FlyFin caters to the tax needs of freelancers, gig workers, independent contractors and sole proprietors. It offers a host of cutting-edge tax tools that help you quickly find deductions. You can also use tools like a home office deduction calculator.
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