Solved: Schedule C. Freelance musician. May I deduct all or part of my internet and phone expenses?
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Schedule C. Freelance musician. May I deduct all or part of my internet and phone expenses?

 
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Level 15

Schedule C. Freelance musician. May I deduct all or part of my internet and phone expenses?

That's complicated.  There are two arguments, both supported partly by interpretations of the regulations.

For the monthly bills, ether:

1. No, because you pay a flat rate. Since your work use does not increase your expense compared to using it for personal use only, no part is a deductible work expenses.

2. Yes, but only the percent of cost that is related to your percent of business use, and you have to have records, logs, or some other reasonable way to allocate your costs between work and personal.

I go with #1, I think there is a Tax Court case to support it, but I don't have the citation.

For purchase of a new phone, you can list it as a work asset, and take depreciation, based on the percentage of work use, if you have records or some other reasonable way to determine the percent of work use.  (Like taking your monthly call records and allocating them between work and business.) I suspect your time is more valuable doing other things.

Of course, a phone, computer, or internet connection that was used 100% for work and no personal use (because you keep separate work accounts and work devices) would be fully deductible as an expense.

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*

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Level 15

Schedule C. Freelance musician. May I deduct all or part of my internet and phone expenses?

That's complicated.  There are two arguments, both supported partly by interpretations of the regulations.

For the monthly bills, ether:

1. No, because you pay a flat rate. Since your work use does not increase your expense compared to using it for personal use only, no part is a deductible work expenses.

2. Yes, but only the percent of cost that is related to your percent of business use, and you have to have records, logs, or some other reasonable way to allocate your costs between work and personal.

I go with #1, I think there is a Tax Court case to support it, but I don't have the citation.

For purchase of a new phone, you can list it as a work asset, and take depreciation, based on the percentage of work use, if you have records or some other reasonable way to determine the percent of work use.  (Like taking your monthly call records and allocating them between work and business.) I suspect your time is more valuable doing other things.

Of course, a phone, computer, or internet connection that was used 100% for work and no personal use (because you keep separate work accounts and work devices) would be fully deductible as an expense.

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*

View solution in original post

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