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Is My Internet Bill Tax-Deductible?

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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 whether you can write off your internet bill or at least a portion of it. You might also have questions like “Does the internet count as part of a utility bill?” or “Are utilities even tax deductible?” Read on and find out!

Table of contents

Key takeaways...Read more

If I work from home, can I deduct internet costs?...Read more

When is my WiFi bill nondeductible?...Read more

Can a W-2 employee deduct their internet costs?...Read more

Does the home office write-off cover all internet costs?...Read more

How to write off WiFi for business...Read more

What else can I claim on my taxes?...Read more

Key takeaways

  • Internet costs are no longer a type of remote worker tax deduction and are only available to self-employed individuals.
  • A portion of your internet can be a home business tax deduction.
  • Utilities are tax-deductible if you work from home.

If I work from home, can I deduct internet costs?

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 remote worker tax deduction on their income tax returns. 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 internet costs if you work from home or regularly do business online. 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
This deduction can lower your 1099 income, which helps you pay less in SE tax. A self-employed tax calculator can help you calculate this.

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.

Can a W-2 employee deduct their internet costs?

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.

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:
  1. Calculate the hours you’re awake
  2. Calculate how many of those hours you use for business
  3. Divide the answer from step two by the answer in step one
  4. Arrive at your business-use percentage
Infographic entitled How To Calculate Internet Business Use Percentage showing how to deduct internet when you work from home.
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 work-from-home 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. You’ll need to calculate the deduction for your home office using IRS Form 8829. If you choose the regular method, you can include other working-from-home tax deductions like:
  • Office plants
  • Rent
  • Utilities
  • Renter or homeowner insurance
  • Office furniture
  • Phone bill
  • Laptop (through depreciation)
Or, you can choose the simplified home office deduction if you want to deduct your entire home office without a lot of calculations and just deduct $5 per square foot of your office or workspace. 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. So which option should you choose? Generally, reporting your internet costs on Schedule C is the safer choice. The reason is quite straightforward – you can only use the internet for the working-from-home tax write-off when you have income left over after covering all your other work-related expenses. 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.

What else can I claim on my taxes?

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. When paying income tax, you can also claim the standard or itemized deduction for your personal expenses. The obvious way to go is whichever route gives you the most tax savings.
Infographic entitled Common Tax Deductions For Freelancers listing seven write-offs apart from home business tax deductions.
The IRS also sets a standard deduction amount each year to match rising costs and inflation. How much you get to deduct with the standard deduction 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. Unlike the standard deduction, 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. 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.
 Infographic entitled What Can I Deduct As A 1099 employee listing some independent contractor tax write-offs that can lower SE tax.
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
Tracking income and expenses is a tedious process. But with FlyFin, income and expense tracking happens automatically. A.I. finds every possible deduction, so you never have to worry about receipts or spreadsheets again. An expert team of CPAs is always available to help answer any question you have about deductions, and they file your taxes for you when the time comes. Tax filing has never been this easy.

Office Supplies Tax Deduction

Office supplies are tax deductible for self-employed individuals and can be reported under the office expenses category on Schedule C.

Phone Tax Deduction

Cell phones can be a business tax deduction for self-employed individuals if it is an ordinary and necessary expense. A separate business cell phone can be fully written off.

Advertising Tax Deduction

Ordinary and necessary promotion expenses and marketing expenses are tax-deductible for self-employed individuals. They should be claimed on Schedule C when filing 1099 tax.

Business Insurance Tax Deduction

Self-employed individuals can deduct business insurance expenses from their 1099 taxes. Sole proprietors and single-member LLCs can claim it on Schedule C.

Meals Tax Deduction

The meals and entertainment deduction in 2024 allows 1099 workers to deduct 50% of business meal costs. Certain meal and entertainment expenses are still fully deductible.

Business Travel Tax Deduction

Expenses related to traveling are deductible for business purposes. A per diem rate is set for deductible travel expenses.

Charitable Contribution Tax Deduction

If you make a charitable donation to an organization, it might count as a tax deduction. Not all charitable donations count as a write-off.

Clothing And Accessories Tax Deduction

Self-employed individuals can take the clothing tax deduction if their clothes cannot be worn outside the work environment.

Commission And Fees Tax Deduction

Self-employed individuals can claim certain commissions and fees as tax deductions if they are related to their business and are ordinary and necessary.

Contract Labor Tax Deduction

If you do any contract labor, you will have to pay contract labor taxes, also known as SE tax. Estimated payments quarterly need to be made for tax liabilities over $1,000.

Medical and Dental Tax Deduction

Certain dental and medical costs can be claimed as a medical tax deduction if itemized when paying income taxes. Expenses have to be more than 7.5% of AGI.

Rent Tax Deduction

Rent is tax deductible for self-employed individuals who work from home or have a separate office space. Some states offer renters tax credits to lower state taxes.

Repair and Maintenance Tax Deduction

Capital improvements can be claimed as a tax deduction through depreciation. Repairs to rental properties can be claimed as a business expense.

Professional and Legal Services Tax Deduction

Legal fees are tax deductible from 1099 taxes under the legal and professional fees category on Schedule C. The category also includes consultant and tax prep fees.

Shipping Tax Deduction

Business-related shipping expenses are tax-deductible. Shipping supplies and the cost of shipping are included as write-offs.

Software Tax Deduction

Software depreciation can be claimed with the straight-line method, Section 179 or through amortization. Report software depreciation on Form 4562.

Student Loan Payment Tax Deduction

Student loan interest paid is tax-deductible, and every type of education loan qualifies for the deduction.

Taxes and Licenses Tax Deduction

Self-employed individuals can take the license fee tax deduction on taxes and licenses that are ordinary and necessary business expenses.

Training and Education Tax Deduction

The educator expenses tax deduction allows eligible educators to deduct $300 of unreimbursed expenses from their taxes. Use education tax credits to lower tax liability.

Utilities Tax Deduction

Utilities are tax deductible when they are an ordinary and necessary business expense. They can be claimed with the home office deduction or as a rental property deduction.

Vehicle Insurance Tax Deduction

Interest on a car loan is tax deductible if it is used for business. Choose between the standard and actual method when claiming the vehicle deduction.

Vehicle Purchase Tax Deduction

You can claim the vehicle tax write-off if you’re self-employed and use your vehicle for business. It can also be taken if you lease your vehicle.

Mortgage Interest Tax Deduction

The mortgage interest deduction can be claimed by homeowners who itemize their expenses. You could claim the mortgage interest tax credit if you’re in a lower tax bracket.

Office Supplies Tax Deduction

Office supplies are tax deductible for self-employed individuals and can be reported under the office expenses category on Schedule C.

Phone Tax Deduction

Cell phones can be a business tax deduction for self-employed individuals if it is an ordinary and necessary expense. A separate business cell phone can be fully written off.

Advertising Tax Deduction

Ordinary and necessary promotion expenses and marketing expenses are tax-deductible for self-employed individuals. They should be claimed on Schedule C when filing 1099 tax.

Business Insurance Tax Deduction

Self-employed individuals can deduct business insurance expenses from their 1099 taxes. Sole proprietors and single-member LLCs can claim it on Schedule C.

What’s FlyFin?

FlyFin caters to the tax needs of freelancers, gig workers, independent contractors and sole proprietors. But anyone can file taxes through FlyFin! FlyFin tracks all your business expenses automatically using A.I. technology. Then, our CPA team files a guaranteed 100% accurate tax return for you – to save you a couple thousand dollars and a ton of time on your taxes. In addition, you can download the FlyFin app and have your taxes filed in less than fifteen minutes, saving time and money.
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