If I purchased a cell phone that I use for SE business and personal use, and am paying installments, can I deduct the cost of the phone as an expense?

[MichaelG81]

It depends, if you're self-employed and you use your cellphone for business, you can claim the business use of your phone as a tax deduction. If 30 percent of your time on the phone is spent on business, you could legitimately deduct 30 percent of your phone bill. In “Entrepreneur” magazine, writer Kristin Edelhauser recommends getting an itemized phone bill, so you can measure your business and personal use and prove your deduction to the IRS. Alternatively, you could get a second phone and use it exclusively for business.

Cellphone depreciation

The Small Business Jobs Act of 2010 changes the way you calculate cellphone depreciation, according to the Schneider Downs accounting firm. Under the old rules, if you used your cellphone less than 50 percent of the time for business, you could only depreciate it on a straight-line 10-year depreciation schedule. Now, however, the law allows you to write off depreciation—the spreading out of the cost of its useful life—over a seven year period, in addition to making it easier to claim bonus depreciation.

According to this article: 

Applicable deductions

Your computer, cell phone, Internet service, software and even some cool tech gadgetry are possible tax deductions if you must use them to run your business. Michael Carney, owner and president of MWC Accounting in Chicago, said expensive tech hardware can qualify if it is an asset that retains its value over several years. The business owner has a choice on how to deduct the costs of those items.

“You can depreciate them, spreading the deduction over the number of years the IRS considers to be the shelf-life for this item, or you can write the entire cost off for the year of purchase," Carney said.

"Your choice between the two depends on your projected income and other expenses going forward. If you had a big year and want to reduce your profits to minimize the tax bite, it’s best to write the entire cost off."

Carney said this strategy means you will have less to deduct in the coming years.

Also, with most tech gadgets, you can claim a percentage of time that you used that device for business purposes. Most pros caution against claiming 100 percent.

“People will buy a computer and will use it exclusively for business,” said Illinois-based certified public accountant Neil Johnson—also known as "The Tax Dude"—“but, it might be a bit of red flag to the IRS to claim that. Most people will, at the very least, periodically check the news or their personal email account on their work laptop or desktop.”