I own a small business which is Incorporated, S-Corp. I handle the computer side and my wife handles photography side. We both have cell phones which is the only phones for the business. On the business cards, advertising etc.. it has my cell number as business number and her cell number as business number. Our voicemails and caller ID are done for the business as well.

We do not have a regualr home phone. We just use the cell for our non-buisness calls as well. Since our cell phones are our business lines, can we deduct the cell phone bills?

I would think that you could actually determine the exacts costs and share the expenses.

Typically you have hours peak for business and hrs peak for home and off peak home and business and allocate accordingly. Over per minute rates can be based on relative use.

The IRS, believe, does say you can allocate with respect to usage when you can do it cleanly. Use of a laundry room for an office business and a laundry room might be much more difficult, so would alllocating computer usage.

I do hope someone can confirm and I'd check with your accountant.

Example: unlimited phone plan; cost $250/mo
1. You used 100 min
2. Company used 1000 min

You pay company $250*100/(100+1000) and company pays the rest.

Now, there is recordkeeping and it might be more trouble than it's worth because you'll have to prove the business expense.

Yes what you pay for the phone is deductible as a business expense to the point that it is used for business.

The good news is that most carriers can make this easy for you by providing a record of your calls.

Ask your carrier if they can provide the record monthly in an Excel or CSV format. You can then load the data into a spreadsheet and mark each call as business or personal (usually depending on the number you connected to).

You can then add up the costs for each and determine a percentage for biz/personal which is applied to the monthly fee.

So lets say your bill for October was $250 of which $100 was the monthly fee, $100 was business calls and $50 was personal calls. You could claim a business deduction of $167. That would comprise the %$100 of business calls plus 67% of the monthly fee (100/150).

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Originally Posted by ScottGem

Yes what you pay for the phone is deductible as a business expense to the point that it is used for business.

The good news is that most carriers can make this easy for you by providing a record of your calls.

Ask your carrier if they can provide the record monthly in an Excel or CSV format. You can then load the data into a spreadsheet and mark each call as business or personal (usually depending on the number you connected to).

You can then add up the costs for each and determine a percentage for biz/personal which is applied to the monthly fee.

So lets say your bill for October was $250 of which $100 was the monthly fee, $100 was business calls and $50 was personal calls. You could claim a business deduction of $167. That would comprise the %$100 of business calls plus 67% of the monthly fee (100/150).

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Ok. Where I am confused is we pay a flat fee per month of $105 per phone. That is unlimited plan. It's not like I am being charged per call. If so I could add up the total cost of the business calls and same with personal calls. The way it is now, I do get the calls idemized however if I make 1,000 business calls and 50 personal or the other way around the fee is the same. With this in mind, how would I assign a "cost" to each call? Couldn't I just claim the total $105/per phone since it's all unlimited, flat fee?

No, you cannot, legally, claim the whole $105 since its not 100% used for business.

If your itemized statement doesn't include the time spent on each call then you will have to go just by percentage of calls.

For example, if it is itemized and you spent 50 minutes on personal calls and 450 minutes on business calls, then you would claim $93.45 for the business. If you divide 50 by 450 you get 11% of personal calls, so 89% was business related.

If you can't get a by minute statement, then just do it based on the number of calls. Bottom line is you have to determine what percent of calls were attributable to the business and apply that to your flat fee and deduct that amount.

SouthernDigital:

What Scott says is completely accurate, and ideally you should pro-rate the usage based on the actual usage of the phone.

However, most people find this an undue burden, so they estimate their personal versus business usage.

If your best estimate of daily usage shows you use the phone 10% of personal use and 90% for business, then claim 90% of the cell phone bill on your corporate tax return. You must be ready to defend the estimate, i.e. show the IRS that you actually did the math for one month, then based your annual usage on that one month sample.

If the usage percentages are NOT extreme (say, 1% for personal and 99% for business), the IRS will normally accept your estimate at face value.