Claim y our internet costs as a communiations expense, becuase that's *EXACTLY* what it is for you. There is a caveat though, and it's important you understand this.
If your house where you home office is only has one hard wired telephone line, you can not claim one single penny of your voice telephone bill as a business expense. The IRS says so. You would need to have a separate line with a separate phone number. Then you could claim that 2nd line for the business and claim 100% of the cost of that second line only.
For internet access, you have two options. There must be a physical hardwired network drop in the home office, or there must be a device in that home office that requires internet access and connects wirelessly to the service you pay for. THen you can claim as a business expense, the percentage of the Internet bill that does not exceed the percentage of floor space that you use as your home office. So if you claim 10% of your residence as a home office, the maximum amount of your Internet bill that you can claim as a business expense is 10%.
The other option is to allocate internet access based on the number of residents that live in the house permanently. This includes dependents. So if it's you and your spouse and you have two kids, you can claim a maximum of 25% of your internet bill as a business expense.
These two options apply to all utility expenses that you claim for business use. But understand that in order to claim that utility, it must be physically available in the home office. So if you've converted a bedroom to your home office, I seriously doubt you have running water in that bedroom, or a need for it in that bedroom. So you can't claim any of your water bill as a business expense. Yes, there are exceptions to these. But for the most part any exceptions are so obvious that it's not a problem.
So while home office space is allocated based on percentage of square footage that is business use, your office utility use percentage can be based on either the same, or based on the number of occupants living in the house that utilize those same utilities that the home office does.
