Can You Deduct Cell Phones As a Business Expense?

Lauren WardUpdated May 22, 2023

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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.

Yes, you can deduct cell phones as a business expense. It’s quite common to do so. Taking a cell phone deduction for business purposes often simply requires you to keep track of what you spent on cell phone expenses and how much time you spent on your cell phone for business purposes.

What Cell Phone Expenses Can Be Deducted

Researching how to write off cell phones for business? The good news is that just about any cell phone cost can qualify for a small business cell phone deduction. Therefore, the following cell phone expenses can be deducted as long as their use relates to your work:

Cell phone
Monthly plan
- Calls
- Data and internet
Cell phone accessories, such as:
- Case
- Protective screen
- Car mounts
- Ring lights
- Bluetooth headset
- Chargers
Apps

As stated, the important thing to keep in mind is that the expense relates back to business operations in some way. For example, you can’t purchase a game on your cell phone and then write it off as a business expense. The app expense must relate to operations in order for you to claim it as a deduction. FYI, if you’re new to the world of small business tax deductions, there are 22 small business tax deductions you should know as we move through 2023. Recommended: Finding Investors for a Business.

How to Differentiate Personal Vs Business Uses

For most people, browsing Instagram and answering calls from their parents are not business related activities (unless they’re doing social marketing or are in business with family). Therefore, it’s important to differentiate how much of your cell phone usage is actually business related. The safest way to determine this is to do the math.Example: Let’s say a small business owner wakes up at 6 in the morning, and is at work by 8. She works from 8-5, and takes a one hour lunch break. From 5 PM to 10 PM she is with her family. She goes to bed at 10 PM every day and has weekends off. She is, therefore, awake for 112 hours every week, and actively works for 40 of those hours: 40/112 * 100= 36%The most amount of her monthly cell phone expenses she should deduct is 36%. However, this calculation does not include any deductions for apps and accessories, which we discuss below. Recommended: What You Need to Know About Financial Projections.

How to Include Cell Phone Depreciation

Depreciation is the act of recovering the cost of an asset over a certain period of time. With the passing of the JOBS Act in 2010, cell phone users can depreciate the cost of their phone over a 7 year period instead of a 10 year period using the straight line method. This means you would take the total cost of the phone and divide it by 7. You would then deduct that amount from your taxes for a total of seven years.To include depreciation, you will need to fill out form 4562, and transfer the amount over to line 13 of Schedule C (assuming you are a sole proprietor).

How Much of Your Cell Phone Expenses Can Be Deducted?

The answer to this depends on which expenses are in question and how much of your cell phone is used for business purposes. If it’s a cell phone that you only use for business, then 100% of the expenses can be deducted. While it may be tempting to get a separate line so you can deduct all of the expenses, just keep in mind that any savings you would receive via deductions would likely be outweighed by the costs of an additional line. Most people use a single line phone for both personal and business use. If this is the case, then you can only deduct the percentage of time you use your phone for business purposes. For example, if 60% of your phone usage is for personal use, and 40% is for business, then you can only deduct 40% of your bill for tax purposes. Recommended: Is a business loan tax deductible?

New Phone Costs and Deductions

Cell phones were once considered listed property, which means that the IRS considered their use to be personal even though they were used in a business setting. This mindset has since changed since the passing of the JOBS act. Tax filers are no longer required to keep detailed notes to claim phone deductions. However, they can only write off the percentage they use their phone for business purposes. Recommended: Funding Circle Small Business Loans: 2023 Review.

Can You Deduct Phone Accessories and App Purchases?

Yes, as long as the accessories and apps were purchased exclusively for work they can be deducted. In fact, because they are business expenses, you can deduct 100% of their costs. There are many apps and accessories that can be deemed a business expense, so there is no need for an ‘official’ exhaustive list. So long as the accessory or app helps you operate your business it can be considered a business expense. For example, accessory examples include protective covers and cases, car mounts, and ring lights, while apps like DocuSign and Dropbox would be legitimate apps to write off as a business expense. Recommended: 5 Small Business Tax Tips for Business Owners.

Where Can You Deduct Phone Costs?

In order to take the small business cell phone deduction, you will need to fill out form Schedule C which can be found on the IRS website. Schedule C is not just to claim cell phone deductions. Its primary function is to report business income and expenses. If you own a small business, you may also use it to report the cost of goods sold (aka COGS) and any depreciation expenses you may have incurred. Recommended: Guide to Revenue-Based Business Loans.

The Takeaway

If you are self employed or use your cell phone for business purposes, then you can deduct cell phone expenses. To make it as easy as possible, save all of your receipts — especially if you have monthly app subscriptions or purchase multiple accessories. In some cases, getting a small business loan can help with your expenses and purchases used to grow your business. Lantern Credit compiles personalized financing offers from multiple lenders to connect you with the right funding.

Frequently Asked Questions

Can cell phone expenses be deducted?

What category is a cell phone deduction?

Is there a maximum amount you can deduct for cell phone expenses?

Photo credit: iStock/anon-tae

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About the Author

Lauren Ward

Lauren Ward is a personal finance expert with nearly a decade of experience writing online content. Her work has appeared on websites such as MSN, Time, and Bankrate. Lauren writes on a variety of personal finance topics for SoFi, including credit and banking.

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