Can I Write My Cell Phone Off on My Taxes?
Many people use their personal cell phones during business hours. While you may limit your cell usage to making quick calls to take care of personal business on breaks, you may find yourself often using your cell phone for business calls, too. Similarly, even if your employer provides a company cell phone for you to use during business hours, you may use it to make personal calls, too. Given the blurred distinction between personal and business use of your cell phone, you may well be confused regarding the rules for writing off your cell phone on your taxes.
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History
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Mention of cell phones as "listed property" appeared in IRS tax code verbiage as early as 1989. In order to make an accelerated depreciation deduction on a cell phone, rather than deduct depreciation in increments over a course of years, you and your employer had to provide adequate proof of business usage, including times and places of the calls you made, how those related to business, and your relationship to the business. This provision remains in effect to the present time.
Types
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The current IRS code allows you a few types of cell phone deductions. You can claim depreciation on a cell phone you use for business in the same way you claim depreciation for other office equipment, such as computers. In order to do so, your employer must require you to own a cell phone as a condition of employment.
Another way you can get this depreciation allowance--deduction--on your taxes is by claiming a Section 179 deduction on the initial cost of qualifying property, in effect collecting future depreciation at the time of purchase. Of course, you must substantiate business use of your cell phone to take this deduction.
You can also deduct business usage of your personal cell phone on your itemized deduction Schedule A under miscellaneous expenses, if that expense is more than 2 percent of your adjusted gross income.
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Identification
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The IRS makes a distinction between a business cell phone as a fringe benefit that you report as part of your income or a working condition benefit that you do not. If your employer purchases the cell phone and pays the monthly bill on a cell phone provided for your use in conducting business only, the cell phone qualifies as a working condition fringe benefit that you do not report as income. However, if you use the employer-furnished cell phone for personal use as well, you must include a percentage of the phone costs as a reportable benefit.
Misconceptions
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If you use your personal cell phone to make calls regarding your investment portfolio, that does not qualify as business use of a cell phone by IRS definition. Therefore, as "listed property" it would not qualify for accelerated depreciation.
Potential
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Recognizing the pervasive use of cell phones for a combination of business and personal purposes, the IRS is attempting to simplify the way employers are required to substantiate employee use of employer-provided cell phones..
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References
- Photo Credit man on cell phone image by Cora Reed from Fotolia.com
