Deducting your Cell Phone From Your Business | USTaxAid

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Deducting your Cell Phone From Your Business

Written by Diane Kennedy, CPA on November 6, 2021

You have a cell phone (like pretty much every person in the US) and you have a business. 

There is a secret that most likely no one ever told you about deducting your cell phone. First, we need to go over a little history about cell phones and taxes. 

Prior to 2010, the cellular phone was considered a “listed” property. That meant you had to track how much use was business versus personal use. Then, in 2010 (Small Business Jobs Act of 2010) and 2011 (Notice 2011-72), the IRS gave us some guidance that made it a whole lot easier for your business to take a deduction for your cell phone.

Your company can provide a cell phone for you. That includes the cost of the cell phone as well as the cell phone plan. The business use portion of the cell phone is considered a “work place fringe benefit”. In other words, there is a business purpose for the cell phone. The personal use portion is considered a “de minimis fringe benefit”. In other words, it is of little value so it’s not taxable to you and still deductible for the business.

The bottom line is that your company can take a full deduction for the cell phone that is provided to you, as an employee. This is a discriminatory plan. In other words, you don’t need to give every other full-time employee a phone in order for it to be a deduction. And you won’t pay tax on the benefit.

**NOTE: In this case, both parts of the cell phone deduction (work place fringe benefit and de minimis fringe) are allowed as tax free benefits to the owner of a Sole Proprietorship, Schedule C. This isn’t always the case with tax-free benefits. Check first! Don’t assume you get the deduction.  

**NOTE: I did a quick search online regarding cell phone deductions and found many “tax authority” sites quote pre-2010 law regarding cell phone deductibility. The search I ran was done in 2021! The law is over a decade old and most online sites don’t have the “new” information. Make sure you know your sources are accurate and up-to-date. If you get bad information, and act on it, you’re the one who will pay the price. 

Where do you get your tax information? If you’re relying on the internet, you may be getting bad information. For a limited time, you can sign up for Strategic Tax Updates for FREE. This is normally $99/year, but you can have it for free as long as you do these two things: 

 

  • Maintain a subscription for the Strategic Tax Updates at Tax Updates.

  • Click through on at least one link a week so we know you’re alive. 

 

One Comment

  1. Adegbenga Onasanya says:

    Very informative

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