The Internal Revenue Service, or IRS, does not consider cable or telephone services as utilities for the taxpayer looking to claim these items as a deduction. However, cable television and telephone service may still be deducted by the home-based worker in certain situations, but they must be listed as a different type of expense.
Qualifying for a Deduction
Using a telephone, cable TV or broadband Internet provided by the cable company while working from home does not automatically entitle you to an income tax deduction for the cost of these services. First, you must maintain a qualifying home office. The IRS stipulates that only home offices used solely to conduct business are eligible for a deduction. An office serving double-duty as a guest bedroom or kitchen does not meet the requirement. If you keep a dedicated office in your house or apartment, a portion of your cable service and extra charges for business telephone calls may be deducted. For example, when a home office takes up 15 percent of your home's square footage, 15 percent of the cable costs could be deducted if the cable serves a business purpose.
Tax Form 8829
Self-employed taxpayers must use Form 8829 to claim a tax deduction for business use of the home. This form helps you determine the percentage of your home used for business purposes and separates expenses associated with your home, such as utilities, insurance, rent and other expenses. Classify the cable and phone service expenses as "Other expenses." The information on a completed Form 8829 is transferred to the Schedule C tax form.
Schedule C Tax Form
Schedule C "Profit or Loss from Business" is a tax form that allows sole proprietors to report earnings and claim business deductions. After you have determined the entire deduction for business use of your home or apartment, report the total from Form 8829 on Schedule C, Line 30, "Expenses for business use of your home." Do not duplicate enter any of your home-related expenses under Part II of the Schedule C. The "Utility," "Mortgage" and "Other expenses" lines under the Part II expenses refer to dedicated offer spaces owned by a business instead of home office expenses.
Documenting your expenses is essential when claiming income tax deductions. When you claim deductions for long distance telephone calls on a primary family phone line, retain the full bill including the pages specifying the long distance calls. If you claim entire telephone bills on your income taxes, keep both the bills for your office line and the house line. When deducting cable expenses, consider keeping a time log documenting your business use of the service.
- Can I Claim My Car on My Taxes if Work Pays for Gas & Insurance?
- IRS Mileage Log Requirements
- Things That a Salon Booth Renter Can Write Off on Taxes
- Tax Deduction for Temporary Housing Out-Of-State
- Is Attending Conferences Tax-Deductible?
- Is Building a Basement Home Office Tax Deductible?
- Can I Claim Expenses When Flipping a House?
- IRS Form 2106 / 2106-EZ Requirements