Cellular Device on an installment plan

[StarGoyle]

Hello,

I'm a gig worker and I bought a new device and new service with a different carrier so all of the business related work is done on that device/service. So it's 100% business.

What I am unsure about is how to itemize the cost of the phone itself which is being paid via an installment plan.

Do I deduct the total cost of the phone for the 2022 tax year even though I'm still making payments or do I only deduct what I've paid so far?

Also, in the communication expenses section do I put my cell phone service there as well as the phone and related accessories (case, screen protector, etc) there or do I leave the service costs there and put the hardware and what not under an another category?

Thank you

[AnnetteB6 · Accepted solution]

The cellphone itself will be entered as an Asset on your Schedule C Business Income and Expenses.  You would have some choices to make as you go through that section as far as to determine whether you want to depreciate it over time or write off the full cost in the first year.  Either way, the full cost of the phone will be entered in this section.  In the future though, be sure you are not deducting your monthly payments for the phone since the full cost has already been handled.

You would enter your cell phone service expenses in the communication expense section.  You could include those accessories there as well, or put those in supplies or miscellaneous expenses.  It all adds up to the same amount regardless of which section is used.  

[StarGoyle]

I think I'll just go with deducting the full cost and get it out of the way. I actually maintain records of my phone bill less the monthly cost of the phone itself so that works out well since the values are already separated each month when I'm doing my bookkeeping.

You've helped me out with the final hurdle I was having. Now I can get this done and proceed with filing. Thank you so much!