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There are two possible responses.
1. Since it's a flat rate and you would pay the same even if you weren't a contractor (I assume this is your shared home internet), you can't deduct it as a work expense.
2. You can deduct the portion that is reasonably associated with your work, but you must have some kind of records to show how you determined this.
I read a tax court case once about a married couple who deducted, among other things, the cost of home internet to do research for writing books. The tax court denied the deduction because the couple did not offer any justification or rationale showing how much of their internet use was work-related. So this would seem to say that the IRS will accept argument #2 as long as you have some reasonable basis to allocate costs. (But the court didn't say what would have been reasonable, only that the couple being audited had offered no basis at all.)
Maybe hours? Keep a log of the number of hours you are using your home office internet for work? Maybe you can install a logging app on your router? Maybe you can get a dual band router and set up 2 networks, one for home and one for work, and have the router count the gigabyte of traffic on each network?
If you are sending emails and your family is streaming Netflix, can you really allocate any cost to the business?
I do know that your records must be contemporaneous, so even if you went with a rough log of hours, the IRS won't accept your recollection now of what your 2019 use was. If you use a method that relies on your own recollection, you need to write it down close enough in time to the actual event that your recollection is fresh.
Of course, if you had two separate internet connections that were billed separately, you could deduct the one used exclusively for business without such records. The fact that it was 100% business would be enough.
(Splitting your cell phone costs has the same issues. If you have a work-only cell phone, you can deduct the entire cost, but if you share your phone between work and personal, you need a reasonable basis to allocate costs.)
There are two possible responses.
1. Since it's a flat rate and you would pay the same even if you weren't a contractor (I assume this is your shared home internet), you can't deduct it as a work expense.
2. You can deduct the portion that is reasonably associated with your work, but you must have some kind of records to show how you determined this.
I read a tax court case once about a married couple who deducted, among other things, the cost of home internet to do research for writing books. The tax court denied the deduction because the couple did not offer any justification or rationale showing how much of their internet use was work-related. So this would seem to say that the IRS will accept argument #2 as long as you have some reasonable basis to allocate costs. (But the court didn't say what would have been reasonable, only that the couple being audited had offered no basis at all.)
Maybe hours? Keep a log of the number of hours you are using your home office internet for work? Maybe you can install a logging app on your router? Maybe you can get a dual band router and set up 2 networks, one for home and one for work, and have the router count the gigabyte of traffic on each network?
If you are sending emails and your family is streaming Netflix, can you really allocate any cost to the business?
I do know that your records must be contemporaneous, so even if you went with a rough log of hours, the IRS won't accept your recollection now of what your 2019 use was. If you use a method that relies on your own recollection, you need to write it down close enough in time to the actual event that your recollection is fresh.
Of course, if you had two separate internet connections that were billed separately, you could deduct the one used exclusively for business without such records. The fact that it was 100% business would be enough.
(Splitting your cell phone costs has the same issues. If you have a work-only cell phone, you can deduct the entire cost, but if you share your phone between work and personal, you need a reasonable basis to allocate costs.)
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