If I Use My Personal Phone for Work, What Can I Claim?

It's not uncommon for solopreneurs, gig workers, and small business owners to use their personal cell phones for business functions. Smartphones can handle client communications, email, scheduling, and bookkeeping, among other essential tasks, all in the palm of their hands.

If you've been using your phone for business purposes, you're probably wondering: What can I legally claim on my taxes if I use my personal phone for work? As long as you meet IRS criteria and maintain supporting documentation, you can deduct the portion of your smartphone costs associated with business use. But how?

By following this essential guide, you can keep more of your hard-earned money while ensuring peace of mind. It breaks down exactly what you can claim, how to calculate your deductions, and how to remain IRS-compliant as you build your business. 

Who Can Claim Personal Phone Usage, and What Can You Deduct?

Not everyone who works is eligible to deduct cellphone expenses from their cellphone bill, but if you're self-employed or run a small business then chances are you qualify. You may be able to deduct both direct and indirect cellphone expenses as long as you can demonstrate business use.

Figuring Out What’s for Work

To claim a deduction, you must determine how much of your cellphone usage is work-related versus personal use. Business calls, texts, emails, apps (like Slack or Zoom), and data used to run your company all count as business use. 

Tracking your business usage with a log or digital tool is essential to determining the amount you can deduct. If you find that you use your phone 60% of the time for business, you can claim 60% of your phone expenses.

Are You an Employee or Self-Employed?

You can deduct eligible phone costs on your Schedule C (Form 1040), Profit or Loss from Business (Sole Proprietorship) if you're self-employed or run a small business LLC. However, this is not an option if you're a W-2 employee. Since the 2017 Tax Cuts and Jobs Act (TCJA), employees can no longer deduct unreimbursed job expenses—including cellphone costs—from their federal taxes.

While employees can no longer deduct cell phone reimbursements, they can still accept them. If your employer reimburses part of your phone bill, make sure it’s properly accounted for to avoid duplicate claims or flags that may invite unwanted attention from the IRS..

What Can You Deduct?

Now that you've established your eligibility, it's time to identify specific expenses that you can deduct on your tax return. 

What’s a Direct Expense?

These are costs tied directly to your monthly cell phone use for business, including:

• Service charges

• Data plans

• Business-only app subscriptions

• International calling fees for client work

Remember—you can only deduct the portion of your phone used for business reasons. For example, if your bill is $100/month and you use it 70% for business, you can deduct $70 from your monthly bill.

Phones and Fixes

If you upgraded to a new smartphone this year or plan to, you may be able to deduct part of the cost or depreciate it over several years. The IRS lets you recover the cost of business assets through depreciation if the asset has more than one year of useful life. 

If you have yet to upgrade, but have repair costs associated with common issues like a cracked screen or battery replacement, and the phone is partially used for business, a portion of the repair cost is deductible, too. You can avoid or reduce smartphone damage via a screen protector or phone case, which are also tax-deductible.

How to Calculate and Keep Track of Deductions

Calculating each deduction is one of the more time-consuming and challenging aspects of reducing your tax liability. Follow this guide to maximize your tax savings. 

How Much is for Business?

Use your phone's screen time feature or a usage log to determine how much of your activity is business-related. You can also analyze your mobile phone bill and highlight business numbers from personal calls.

We recommend retaining documentation for at least three months to establish a reliable pattern of business use.

Different Ways to Calculate

There are two main ways to calculate deductions related to business use:

• Actual Expense Method: Track the exact portion of your phone bill and phone costs related to business use.

• Simplified Method: Estimate business use as a percentage and apply it to your total phone costs. This works best for solopreneurs with consistent usage patterns.

If you need help with calculations or determining the optimal method, 1-800Accountant is ready to assist. Let our experts ensure your deductions are accurate, optimized, and claimed by the appropriate deadline. 

Keeping Everything in Order

Good recordkeeping supports your deductions, ensures a smooth tax preparation process, and aids in audit defense should you receive a notice. Records you should consider retaining include: 

• Monthly phone bills

• Notes differentiating between business and personal usage

• Receipts for phone purchases and repairs

• Any reimbursement documentation

A digital expense tracker or app can streamline this process. 1-800Accountant’s tech tools and mobile application let you upload receipts and link accounts effortlessly.

Following IRS Rules

Make sure your documentation aligns with IRS expectations for business owners in your state and industry while avoiding common pitfalls like claiming 100% of your bill when you use your phone for personal calls. And don’t forget to properly implement depreciation if you’re deducting part of the phone’s cost.

Real-Life Scenarios and Tax Tips

Refer to the deduction example below that best fits your business classification. Sometimes, the best way to understand deductions is to consider a real-world scenario.

Business Owner Example

Olivia runs a graphic design business. She uses her personal phone for project discussions, client calls, and social media marketing—about 75% of her total usage. Her bill is $120/month.

In this scenario, Olivia would determine that $90 of her $120 monthly bill qualifies as a business expense. She then deducts $90/month × 12 = $1,080/year in business expenses.

Consultant Example

Raj is a self-employed consultant who bought a new phone for $1,200, estimating 60% business use. He can depreciate $720 over three years, claiming $240 yearly, plus 60% of his $80/month cell phone plan. 

Gig Worker Example

Sam drives for a delivery service and uses his mobile device for navigation, orders, and customer communication. He logs 85% of business use and deducts that portion of his phone expenses using the simplified method. 

Employee with Partial Reimbursement

Michelle works remotely and receives a $40/month stipend from her employer to cover work-related phone use employee expenses. Her total bill is $100 per month, and she uses her own device for work 60% of the time. Since she's reimbursed and a W-2 employee, she can't claim additional deductions, but she must account for the reimbursement when reporting her income if it's not classified as a tax-free fringe benefit.

Planning for the Long Haul

Think ahead beyond the current tax season. Tracking and deducting cellphone expenses can be part of a larger, long-term tax strategy—especially if you're scaling your business.

Combine your cellphone deductions with other common write-offs (like home office, software, and internet) to reduce your taxable income over time. To get started, browse our small business tax deductions list for ideas and inspiration.

Using Tech to Make Taxes Easier

Incorporating digital tools and technology into your tax planning processes minimizes errors and headaches while saving time during the tax year.  

Tech Tools for Tracking Expenses

1-800Accountant's mobile application for major smartphone platforms, Expensify, TurboTax, and QuickBooks, helps you securely track and categorize expenses, scan receipts, and store documentation—all from your phone.

Syncing with Your Accounting Software

Automating the sync between your bank account and bookkeeping software ensures no expense is missed. With 1-800Accountant’s full-service bookkeeping solution for small businesses, you can integrate your data, save time, and prepare for tax season with the peace of mind knowing your financial data is current and error-free.

Handling Tricky Tax Situations From Personal Phone Usage

While addressing common business use scenarios with your personal phone is relatively straightforward with a bit of practice, overcoming edge cases requires more insight and expertise.

Dealing with Different States

Do you travel for work or operate in multiple states? State-specific rules may impact your phone deductions and will likely complicate your tax preparation and filing processes. Keeping a mileage and travel log alongside your phone usage can support more nuanced deductions that apply to multistate operations.

Industry-Specific Tax Issues

Your phone may be a vital business tool if you're in real estate, consulting, construction, or a high-communication field. If appropriately documented, some industries can claim higher percentages of business use.

1-800Accountant’s tax experts can tailor advice to your industry, ensuring you never leave money on the table.

Maximize Your Savings with 1-800Accountant

Solopreneurs, gig workers, independent contractors, and small business owners must make every effort to reduce their taxable income throughout the year. As this article demonstrates, your personal phone can be a valuable business deduction—if you know how to strategically claim eligible deductions. From calculating the right percentage to storing proper documentation, correctly executing each step is essential and helps ensure compliance.

Navigating the right deductions for your business operations can be challenging without critical guidance from 1-800Accountant, America's leading virtual accounting firm. Our CPAs and tax experts understand the nuances of your business cellphone deductions, depreciation, and industry-specific rules, giving you peace of mind and the freedom to focus on your next business milestone.

Schedule a call today to maximize your deductions and streamline your tax process, so you can keep more of what you earn.