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Is My Internet Bill Tax-Deductible?
There’s really nothing better than working from home. You can roll out of bed and be at work without needing to commute and worry about traffic or bad weather. The pandemic played a huge role in shifting how people worked, showing us that running a business doesn't always have to be from a storefront.
What's made this possible, of course, is digital technology. It has completely changed our lives in every possible way, especially how and where we conduct business. The internet provides anyone access to a network of possibilities, including freelancers and small business owners.
If access to the internet is necessary for your work as a self-employed person, you might wonder if there is any other work from home tax benefits. You might also have questions like “Is the internet considered a utility?” or “Are utilities tax deductible?” Read on and find out!
Table of contents
Key takeaways...Read more
Can I write off my internet bill if I work from home?...Read more
When is my WiFi bill nondeductible?...Read more
I’m a W-2 employee, can I write off internet for working from home?...Read more
Is the internet part of my utility bill?...Read more
Does the home office write-off cover all internet costs?...Read more
How to write off WiFi for business...Read more
What’s new with the home office deduction in 2024?...Read more
Other work from home tax benefits...Read more
Key takeaways
- Internet bills are one of the work from home tax deductions self-employed individuals can take.
- Utilities are considered a home business tax deduction.
- When deducting a cell phone for business, you can only write off the business use portion.
Can I write off my internet bill if I work from home?
The answer to this question depends on whether you’re self-employed or work for an employer. Before 2018, full-time employees could write off internet costs as a work from home tax deduction. This is no longer the case.
For most self-employed people, the internet is necessary to conduct business. You might have an online clothing store, teach piano lessons to students across the country or stream on Twitch.
The internet makes it possible for you to run your own business, and without it, your business wouldn’t exist. You can deduct the internet if you work from home or regularly do business online. A home office deduction calculator can help.
Running a business online can include:
- Acquiring new business or customers through various platforms
- Online banking for your business
- Sending emails to customers or vendors
- Monitoring analytics
- Researching new products or pricing information
When is my WiFi bill nondeductible?
Let’s say you work for Instacart and manage most of your business on the road. You receive assignments, use the maps feature and check on your payments. Once home, you use your personal internet to create a monthly budget. Your monthly budget isn’t technically related to your job, so you couldn’t write off a portion of your WiFi for business.
But if you were sending work emails or reviewing your Instacart finances using your home internet, a portion of your home internet bill would be tax deductible. You can always use a 1099 tax calculator to find all the deductions you can claim. IRS Publication 535 is also a good resource for finding tax deductions.
I’m a W-2 employee, can I write off internet for working from home?
Sadly, no. Working from home as a W-2 employee doesn’t qualify you for any work from home tax deductions. Some employers will reimburse employees for their interest costs, but that’s totally up to the employer. Before 2017, employees could actually write off the expenses if they were 2% greater than their annual gross income. After the Tax Cuts and Jobs Act, the IRS scrapped this rule until 2025.
Is the internet part of my utility bill?
If you're already claiming the internet deduction, you may be asking yourself, “Are utilities tax deductible?” You can deduct a portion of your home utility bill as a working-from-home tax deduction as long as your home serves as your business HQ.
Does the internet count as a utility bill? Well, it depends. Claiming internet costs as part of the home office deduction, it is a separate cost to utilities. If you’re not claiming the home office deduction, you should report the internet on Line 25 on Schedule C under “Utilities.” You can also include any work-related gas, water and electricity costs.
It would be nice if you could just record these business expenses and be on your way. But things are never that simple with the IRS, who require proof that you actually had a business need for the expenses you claimed. So start saving receipts and other proof of purchase statements.
Business expenses need to be ordinary and necessary to qualify as a self-employment deduction. Suppose you’re a social media influencer. You can deduct internet costs if you work from home as it's a necessary expense. You can also write off buying a high-quality camera as taking photos is an ordinary part of your work.
Examples of ordinary and necessary expenses :
- Work uniforms
- Courses for a certification or license renewal
- Repairs and maintenance of business equipment
- Office supplies
- Advertising
- Office utility bills
Does the home office write-off cover all internet costs?
Like most self-employed individuals, you probably use your home internet for both personal and business purposes. You can only deduct the portion of your bill that's used for work, so you need to calculate your business-use percentage. This can be a bit tricky and requires some math, but at least it saves you money when paying estimated quarterly taxes.
For example, if you run your own business from 9 am to 5 pm every business day and you’re awake from 7 am to 9 pm, you'll need to:
- Calculate the hours you’re awake
- Calculate how many of those hours you use for business
- Divide the answer from step two by the answer in step one
- Arrive at your business-use percentage
So, in this case, your business-use percentage is 41%, which means you can write off 41% of your WiFi bill.
How to write off WiFi for business
You have two options for how to deduct your internet bill, either as a home business tax deduction or separately on Schedule C. If you have a dedicated space in your home for your home office that you use often and it’s your primary place of work, you’re eligible to claim the home office deduction. If you’re going with this option, you can use a home office deduction calculator.
So which option should you choose if you’re still asking “Can I write off internet if I work from home?” Generally, reporting your internet costs on Schedule C is the safer choice. If your income doesn't outweigh your total expenses for the year, you won't be able to claim a home office deduction in that tax year.
If you’re not taking the home office write-off, you’ll need to report your internet deduction on Schedule C and attach it to your Form 1040. With this option, you can write off part of your WiFi for business even if you are experiencing a loss, unlike with the home office deduction. A loss can help lower your taxable income.
What’s new with the home office deduction in 2024?
You can usually deduct your home office if you use part of your home only for your business. Just make sure your space meets the IRS rules for what qualifies as a home office.
So what are the IRS rules for a home office deduction? To qualify as a home office for the IRS, you must use the space regularly and only for your self-employed business. It should be your main place of business or a separate structure related to your business.
However, your home office doesn't need to be separated by a wall or barrier from other areas. If you work from a desk in your living room or a table in your kitchen, you can still take the home office deduction in 2024.
Now you know what the IRS rules for a home office deduction are, but what about how to calculate the deduction? A home office deduction calculator can help you with that. There are two ways to take the deduction.
If calculating percentages for your business expenses seems too complicated, you can use the simplified home office deduction method. This lets you deduct a flat rate per square foot. For anyone taking the home office deduction for 2024, you can deduct $5 per square foot for up to 300 square feet.
If you choose the regular method, you can include other tax deductions for home office like:
- Office plants
- Rent
- Utilities
- Renter or homeowner insurance
- Office furniture
- Phone bill
- Laptop (through depreciation)
Other work from home tax benefits
When you work for yourself, you can take advantage of many self-employed tax deductions to help lower your taxable income and save some money. IRS Publication 535 has all the business deductions freelancers can claim.
When paying income tax, you can also claim the standard or itemized deduction for your personal expenses.
The IRS also sets a standard deduction amount each year to match rising costs and inflation. How much you get to deduct depends on your filing status (single, married filing separately or married filing jointly).
This option is convenient, saves time and anyone can take it, even if you don’t have any deductions to itemize. The standard deduction in 2024 is set at $14,600 for single filers and $29,200 for joint filers.
Itemizing your personal expenses requires some recordkeeping. But you can claim more deductions and potentially save more money. It takes more time and effort, though, and not every item qualifies for a deduction. You can write off expenses like dental costs and charity contributions.
Tax experts generally suggest doing the math for both options and seeing which one gives you the most savings. However, if you feel like you don’t have a lot of qualifying expenses, taking the standard deduction in 2024 is probably the best way to go.
What deductions can I claim without receipts?
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