How Much of My Internet Expense Can I Write Off for Taxes?
If you use your home Internet connection for your home-based business, you might be able to deduct part of the expense on your tax return. The Internal Revenue Service sets forth the guidelines that you must follow for deducting business expenses.
Other People Are Reading
-
Allowed Business Deductions
-
In order for any business expense to be tax-deductible, the expense must be ordinary and necessary to the business that you conduct. That does not mean that you must own an Internet-based business in order to deduct Internet costs, as many small businesses use the Internet to maintain a website, communicate with customers and vendors, and to make sales. If you use the Internet in your daily course of business, you can deduct part of the cost on your federal tax return.
Mixed-Use Expenses
-
Expenses that are used for both business and personal are considered mixed-use expenses. Because part of the expense represents personal use, you cannot deduct the entire amount of the Internet expense but instead divide the expense between business and personal use.
-
Determining Business Usage
-
To determine business use of the Internet, estimate how many hours each person in your household uses the Internet monthly, including the hours you use the Internet for business. Total all of your estimated hours together to get the total amount of hours the Internet is used each month in your home. Divide the number of hours you use the Internet for business by the total number of estimated hours of Internet use by your household to determine the percentage of business use of the Internet. If the Internet use by other members of your household varies greatly depending on the month, such as during summer vacation, calculate the business use percentage for each month separately.
Calculating Business Expense
-
To calculate the Internet business expense that you can claim on your tax return, multiply the business percentage by the cost of the Internet service per month. For example, if you estimate that 20 percent of the Internet use in your home is attributable to business and your monthly service is $30, you can deduct $6 per month in Internet expenses on your tax return.
-
References
- Photo Credit tax forms image by Chad McDermott from Fotolia.com
