A phone and internet tax deduction is the business share of what you paid for service during the year. Add up the phone and internet rows from your bank or card statements, estimate the share of use that was for your business, and multiply. Keep the bills and a note on the share, since 100% is rarely right.
Who can claim a phone and internet tax deduction?
This deduction mainly applies to people who work for themselves: freelancers, sole proprietors and anyone filing a business schedule. Phone and internet costs are business expenses only to the extent they serve the business. If your only work is as an employee, ask a preparer about your situation before claiming anything, because employee rules differ.
Phone costs have one rule worth knowing exactly. IRS Publication 587, Business Use of Your Home says the basic local service charge, including taxes, for the first landline into your home is a nondeductible personal expense. Business long-distance charges on that line, and the cost of a second line used only for business, are deductible. The publication also says these telephone costs are business expenses in their own right, not part of the home office calculation.
Internet service has no special line in that part of the publication. It follows the general idea that a cost used partly for business is counted only at the business share.
Working out the business share of a phone bill and internet plan
The business share is the fraction of use that served the business, and you need a reasonable, written basis for it. For a phone, that can be a sample of call logs or screen-time records over a typical month. For home internet, it can be the hours the connection serves work compared with total use by the household.
Ways to set the share
- A sample month. Pick a typical month, mark business calls and data use, and work out the percentage. Note which month and why it is typical.
- Hours of work. If you work 40 hours a week at home and the household uses the internet about 100 hours a week, a share near 40% is a defensible starting point.
- A separate business line. A second phone or plan used only for business is the cleanest record of all, because its share is the whole bill.
Write down the method and the numbers. The IRS page on what records small businesses should keep asks for documents that show the payee, amount, proof of payment, date and a description of what was paid for. Statements cover the first four. The bills and your share note cover the rest.
Phone and internet bills from statements: a worked example
The totals come from twelve months of statement rows filtered by the phone carrier and the internet provider. Count the rows as well as the money: twelve rows each means no month is missing. Then apply each share separately, because the phone share and the internet share are rarely the same.
The figures below are an invented example for a freelancer with one personal phone used partly for work and a home internet plan shared with the household.
| Service | Statement rows | Yearly total | Business share | Counted |
|---|---|---|---|---|
| Mobile phone plan | 12 | 900.00 | 50% | 450.00 |
| Home internet | 12 | 780.00 | 40% | 312.00 |
| Second business line | 12 | 240.00 | 100% | 240.00 |
| Total | 36 | 1,920.00 | 1,002.00 |
The second line counts in full because it serves only the business. The personal phone and the shared internet count at their shares.
Where the rows come from
Carriers bill monthly, so a year means twelve card or checking statements, sometimes across two accounts. Getting those rows into one sheet takes a CSV download or a conversion. CheapBankConvert is preparing to open as a converter you pay once per statement, with no subscription to remember to cancel. If you are closing the account that paid the bills, download the statements before closing the account, because access can end with the account.
When is claiming 100% of a phone bill wrong?
Claiming 100% is wrong whenever the phone or connection is also used for personal life, which for a single phone or a household internet plan is almost always. Personal calls, family streaming and weekend browsing all sit on the same bill. A full claim on a mixed-use service overstates the deduction and is hard to defend with any log.
Other ways people overclaim
- Claiming the device and the plan twice, once as equipment and again inside the bill when the carrier spreads the phone's cost across monthly payments.
- Counting the first landline's base charge, which Publication 587 treats as personal.
- Applying the home office percentage to the phone bill. Telephone costs are figured on their own, not by floor area.
- Claiming a family plan in full when only one line on it is yours.
Keeping the deduction easy to support
File the twelve bills, the statement sheet and the share note together. Handing a preparer that bundle in one folder, as described in how to organize bank statements for a tax preparer, saves both of you time. For the wider question of which statements to keep at all, see do I need bank statements for taxes.