If I Use My Phone for Work, Can I Write It Off?
The ability to deduct your phone as a business expense is determined by your employment status. Understand the tax rules that apply to your situation.
Using a personal cell phone for work is a common practice, and whether you can claim a tax deduction for it depends on your employment status. Tax rules for this expense differentiate between employees and those who are self-employed, which determines if you can reduce your taxable income.
Deduction Eligibility for Employees vs. Self-Employed
The Tax Cuts and Jobs Act (TCJA) of 2017 suspended the deduction for unreimbursed employee expenses from 2018 through 2025. This means if you are a W-2 employee, you cannot deduct the business-use portion of your personal cell phone bill on your federal tax return. This applies even if your employer requires you to use your phone for work.
For employees, the primary way to receive financial compensation for business use of a personal phone is through an employer reimbursement plan. Your employer can reimburse you for these costs, and this reimbursement may not be counted as taxable income to you.
The rules are different for self-employed individuals, such as independent contractors, freelancers, or sole proprietors. If you are self-employed, you can deduct the portion of your cell phone costs that are directly related to your business activities. The expense is considered an “ordinary and necessary” cost of running your business, meaning it is common in your trade and helpful for your business.
Calculating the Deductible Amount
For self-employed individuals, deducting cell phone expenses requires separating business use from personal use. The Internal Revenue Service (IRS) requires a reasonable and consistent method for determining this business-use percentage. A common approach is to analyze your phone records for a representative period, such as one to three months, to establish a pattern of use.
To calculate the percentage, you could track the number of business calls made versus total calls, or the amount of data used for work apps versus personal entertainment. For example, if you determine that 60% of your phone usage is for business, you can apply that percentage to your eligible costs. It is important to maintain a log or other records to substantiate your calculation.
This percentage applies to your monthly service plan. If your bill is $100 per month and your business use is 60%, you can deduct $60 each month. This calculation should be performed on a month-by-month basis to accurately reflect usage.
Deducting the cost of the phone handset itself is also possible, prorated for business use. If you buy a $1,000 phone and use it 60% for business, your deductible cost is $600. For a phone that costs less than $2,500, the de minimis safe harbor election allows you to deduct the entire business cost in the year you purchase the phone, avoiding complex depreciation schedules. To use this method, you must make an election with your timely filed tax return.
Recordkeeping and Documentation
To support a cell phone deduction, self-employed individuals must maintain records. These documents are needed to prove your expense claim in an IRS inquiry or audit and validate the business-use percentage you have calculated.
Your primary records will be your monthly cell phone bills. These statements show the total cost of your service plan, which is the starting point for your deduction calculation. It is advisable to keep copies of every bill for which you are claiming an expense.
Alongside your bills, you must keep a log or similar record that details your business usage, such as a spreadsheet or notes on the bills. This record should document your method for determining your business-use percentage. For the purchase of the phone itself, the original sales receipt is necessary to prove its cost and the date of purchase.
How to Claim the Deduction on Your Tax Return
Self-employed individuals report the expense on Schedule C (Form 1040), Profit or Loss from Business. This form is where you list all your business-related income and expenses to determine your net profit or loss.
The deduction for your monthly cell phone service is reported in Part II of Schedule C under “Utilities.” If you are deducting the cost of the phone handset itself using the de minimis safe harbor election, that cost is typically listed under “Other expenses” on the same form. This approach allows you to expense the phone without filing separate, more complex forms for depreciation.