Do you want to know if cell phone expenses are tax deductible? Cellphones have become as important to the company as a landline, making them a common and required corporate cost.
However, because smartphones are closely tied to our personal lives for the majority of us, it’s a deduction that the IRS scrutinizes to ensure that personal electronics use isn’t being claimed as a business expenditure.
You can claim a cell phone tax deduction for cell phone expenses paid when the phone is used solely for business.
There is no IRS mobile phone deduction for self-employed individuals. You can, however, deduct any additional business expenditures that you incur.
When you use a personal mobile phone for business purposes, the usual monthly expenditure is not deductible.
To deduct the expenditure, you must determine the cell phone’s business-use percentage on a monthly basis. Adequate documentation might include a journal containing the following:
• Notes indicating whether each call was personal or business-related
• Each call’s business purpose
Moreover, your mobile phone cannot double as your primary residential phone.
Additional cell phone charges are deductible as a business expenditure. But that is not all; as you read on, I will educate you further on the subject at hand.
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Now, let’s get started.
Is My Mobile Phone Tax Deductible
As you can see, your cell phone expenses can be deducted from your taxes. However, the amount you may claim is determined by a number of criteria.
If you are a sole proprietor or a partnership, the most straightforward alternative is to claim the percentage of your expenses that indicate business usage.
However, if you operate a small business, things become complicated.
It may be more tax-efficient to provide phones to employees, pay for their phone contracts, or compensate employees for their mobile phone use.
Your company will determine the best alternative for you.
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Can I Claim My Phone As A Tax Deduction
Yes, you can. More individuals than ever before work from home or distant workplaces, making phones even more essential.
The good news is that you may claim your mobile phone expenses from your taxes when filing your annual report if you use it for work-related purposes. However, there are a few criteria that you should be aware of.
To put it briefly, in order to deduct your phone, you need to:
- Have you personally paid for the service or phone that you are claiming
- Make sure the cost is directly associated with generating revenue for you.
- Possess documentation to support it, such as a bill or receipt.
- Did not claim the fixed rate of 67 cents per hour from the ATO for working from home.
However, the tax laws that apply to single proprietors and limited businesses are not the same. Under some circumstances, the benefit-in-kind (BIK) tax does not apply to mobile phones.
- A cell phone that you supply for both personal and professional use will be exempt.
- Just make sure your firm name appears on the registration and billing.
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Can You Take Your iPhone 13 As A Tax Deduction
Yes, as long as they are employed for business objectives and to advance the business, is the brief response.
When purchasing an iPhone, a buyer who intends to claim input tax credit must make sure that the tax invoice includes the buyer’s name, GSTIN, address, and the seller’s firm name, along with the GST amount charged and the HSN code.
It’s also crucial to remember that, in order to be eligible for the input tax credit, the buyer had to have received the iPhone device, and the seller had to have submitted their GST forms and paid the government’s outstanding taxes.
Additionally, the amount of GST paid needs to be indicated in GSTR-2B as ITC.
Thus, as long as you use your smartphone primarily for business purposes, you are able to deduct the purchase of your iPhone 13 from your taxes. You can write off the IRS’s purchase price and servicing charges.
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What Cell Phone Expenses Can Be Deducted
A small company cell phone deduction is available for virtually any expenditure associated with a mobile phone, which is a very positive development.
This means that the following costs linked to your cell phone can be written off on your taxes as long as they are work-related:
- A mobile phone
- Plan for each month
- Phone calls
- Information and the Internet
Applicable mobile phone accessories, such as, but not restricted to:
- The case
- Screening for protection
- Mounts for automobiles
- It is a ring of
- Headphones with Bluetooth connectivity
- Those who charge
- Apps
In light of what has been discussed, the most essential thing to bear in mind is that the expenditure is connected to the operations of the firm in some kind.
An example of this would be the fact that you cannot buy a game on your mobile device and then claim it as a business cost.
There must be a connection between the app expenditure and operations in order for you to be able to claim it as a deduction.
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Which Portion Of The Cost Of Your Cell Phone Is Deductible
Your mobile phone cost is often only partially deductible because you will use it sometimes for personal purposes.
You may only write off the portion that corresponds to your company use, much like when you deduct computer expenditures.
This implies that you deduct 60% of your phone cost if you use your phone for work-related purposes 60% of the time.
Of course, you can deduct 100% of your business-related expenses if you purchase a separate cell phone and plan. (The same holds if you have a landline at your home office that you only use to make business calls.)
I don’t advise independent contractors and freelancers to obtain separate work phones.
Even with the write-off, you would still wind up with less money in your pocket since you would need to spend hundreds of more dollars a year.
If you feel that your work calls are interfering with your personal life, get a separate mobile phone for business use.
What Are The Requirements For Deducting A Phone Bill
When they use their mobile phone only for business-related functions, company owners are eligible to receive a tax deduction for the costs that they incur on their mobile phones.
On the other hand, if you use your mobile for business purposes, then the normal monthly expenditure will not be eligible for a complete deduction.
To determine whether or not you are eligible to deduct it as a business cost, you will need to compute the proportion of the mobile phone that is used for business purposes on a monthly basis.
It would help if you made every effort to avoid using your mobile phone as your primary house phone in order to prevent even additional issues.
Even better would be to have a phone that is reserved for business and another phone for use at home.
Due to the fact that they are used for personal purposes, the majority of the time, mobile phones are only marginally tax deductible.
However, if you have a separate phone bill and mobile plan that is only for business purposes, then you are eligible to claim a deduction of one hundred percent.
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Final Thought
Now that we have established that your cell phone expenses tax is deductible, also Don’t forget about your cell phone bill and internet subscription while thinking about deductions.
Deducting these phone charges, in addition to other 1099 tax deductions, can help balance income from self-employment, freelancing, and other side hustles.
To prevent IRS inspection, be sure you follow the regulations for this specific deduction.