Record-keeping Requirements for Computer & Cell Phones – Look Out For This One!!


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The IRS is gearing up to enforce a little known record-keeping rule regarding computers and cell phones. Know what to keep so you’re ready if they ask!

4-22-1

Records You Need to Keep For Your Cell Phone

Cell phones and computers are considered listed property, just like automobiles. And just like automobiles, the IRS is going to want to see proof of your business use of your cell phone.

They have specifically said that it’s not enough to simply have a policy that states that you can only use the cell phone for business use. So you must keep a log, or keep track of the cell phone bills.

Highlight your personal calls and figure out the percentage of business use each month, then pro-rate your bill.

Otherwise, plan on the IRS disallowing your entire cell phone bill as a business deduction.

Records You Need to Keep For Your Computer

4-22-2Where would your business be without your computer? Yet the IRS thinks the computer use needs to also be logged and divided between personal and business use.

This one has us scratching our heads a bit. How do you divide up your time? I’m a CPA and a writer, which means I am constantly searching the Internet for ideas, pictures and the latest in tax law changes. Everything I look at (and that includes watching Condensed Soup on YouTube.com) might make it into one of my blogs.

But the reality is I need to track that all and figure out how much of the computer time is spent on personal activities and on business activities.

How about you? Are you ready to produce computer and cell phone logs if asked by the IRS?



2 Comments

  1. HR 4994 seems to have gotten stalled. There are a couple of things in that Bill that I love to see occur, but at this point it doesn’t seem like anyone at the Senate cares….

    Just based on past experience where I’ve gotten lulled into thinking that the IRS would go one way because Congress almost passed a bill – I would be careful.

    I got a few grey hairs when, at the last minute, they removed a provision for doing like-kind exchanges into personal residences. That was about 8 years ago. It was in the Bill right up until the Pres’s signature and then without any announcement, it was removed. I never bothered to check the signed order and almost got sideways without even realizing it. Bottomline – I don’t trust anything, especially if it helps the taxpayer, until it’s passed the House, Senate and been signed by the Pres.

  2. Charlie Way says:

    How does the The Taxpayer Assistance Bill of 2010 (HR 4994), passed the House on April 14, affect this?

    One of the provisions would eliminate substantiation rules that require detailed recordkeeping for business cell phones.

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