If you're like many people, you use your cell phone more than your home telephone service. It just makes sense that something you use so much should be tax deductible. If you use your phone for business, you may be able to claim your monthly bill on your taxes. With the tax law changes, however, you'll now only be able to claim a cell phone tax deduction if you're self-employed.
If you are self-employed, you may be able to deduct part or all of your bill on your taxes.
Cell Phone for Business Use
Much to the dismay of people across the country, the IRS will only allow a tax deduction for a cell phone if the cell phone is used for business. Until recently, you could claim it whether you worked for an employer or yourself. However, under the Tax Cuts and Jobs Act, unreimbursed employee expenses were eliminated and the standard deduction substantially increased. If you work as an independent contractor, however, you can still claim your cell phone bill on your taxes.
If you're self-employed, you can deduct the total amount of your cell phone bills, including any activation fees, on your tax return as long as the calls were business related. Include calls in which you spoke with customers, employees and co-workers, inquired about supplies and handled business-related disputes. You can also count as a cell phone business expense calls you made to talk to potential clients, set up meetings, check your business account balance and learn about new business opportunities. In addition, you can even deduct the money you paid for a new cell phone.
Cell Phone Deduction Exclusions
You may use your cell phone for both business and personal use. In such a case, you won't be restricted from deducting cell phone expenses on your tax return as long as it is primarily used for business. Instead, you'll have to deduct the portion of your cell phone expenses that are tied to your business. For example, if your cell phone is used for your business 60 percent of the time, you can deduct 60 percent of your expenses. The 40 percent you spend communicating with friends and family is off limits.
In the event of an audit, each cell phone business expense may be scrutinized. In such a case, you will need to show that your expense deductions were legitimate. Maintain copies of your cell phone bills and keep receipts for new cell phones, cell phone accessories, batteries and chargers as well. In addition, keeping an itemized call list may help you prove you were dialing a customer rather than ordering pizza.
Cell Phones and 2018 Taxes
The only way to claim your cell phone as a business expense in 2018 is if you're self-employed and you list it as a business expense. This will be itemized on your Schedule C along with your other business expenses for the year.
Cell Phones and 2017 Taxes
If you're filing 2017 taxes and you have an employer, you can still claim business use of your cell phone as an unreimbursed employee expense. The cost must exceed 2 percent of your adjusted gross income and you must itemize on Schedule A to get the credit.
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