Cell Phone Tax Writeoffs
Mitigate your tax liability by maximizing your deductions throughout the year. "A good tax preparer can guide you, but it is your responsibility to save receipts throughout the year," warns "Entrepreneur" magazine. Still, the deductions claimed on items such as cell phones can mean hundreds of dollars off your taxes each year whether you own a business or work for someone else.
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Audit Proof
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Remain audit proof by maintaining accurate and sufficient records of your cell phone usage. This could mean copies of your bill and receipts from paying your bill each month. When audited, you will be asked to provide this documentation so that the IRS can assess whether the amount you paid in taxes in previous years is accurate. The responsibility of tax payers to prove their deductions is called your burden of proof and is required of any individual or entity.
Personal Use
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Cell phones used for business and personal use can be confusing when it comes to tax write offs. You are allowed to deduct a cell phone for business use when it is used 50 percent or more for business purposes. However, this can be difficult to track throughout the year if your cell phone is in constant use. When possible, use separate lines for business cell phones and personal cell phones. If your cell phone is employer-provided, the burden of proof is on the employer to prove your cell phone is for business purposes only.
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Unreimbursed Employee Expenses
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Some employers reimburse employees for the use of their cell phones at work, but others are expected to use their cell phones to conduct business without compensation. When you incur out-of-pocket professional expenses at work, you can claim the expense as a miscellaneous deduction on your taxes. "The only problem is that these deductions don't do you any good until they come to more than 2 percent of your adjusted gross income," explains Bankrate.com. This means you must keep track of bills and phone records throughout the year to calculate how much it cost you to use your cell phone for work before you can claim the deduction.
To Deduct Or Not Deduct?
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The latest technology in cell phones come at a hefty price. Productivity features included with the smart phone include calendars that sync with a computer, email access and task alerts. If you purchase a smart phone for your business, it is considered to be equipment similar to your computer. Business equipment can be deducted in the tax year it is purchased or later. "You can either depreciate them, meaning that you spread the deduction over the number of years the IRS considers to be the useful life of the item, or you can write the entire cost off in one fell swoop as a Section 179 deduction," explains Reuters.
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References
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