Do I need to track every call to prove business use?

The IRS doesn't require call-by-call logs for cell phones. A reasonable estimate based on your actual usage pattern, documented at the time, is sufficient. Many practitioners recommend a one- or two-week log once a year to establish the ratio, then apply that consistently. Claiming 100% business use on a phone that clearly has personal use is an audit risk.

Can I deduct a separate phone I use only for business?

Yes — a phone used exclusively for business purposes is 100% deductible. Many business owners maintain a second line or device for business calls and text. A separate number for client communications creates a clean deduction with no personal-use allocation required.

What about the phone purchase itself (the device)?

A cell phone purchased for business is a depreciable asset — or immediately expensable under Section 179 or bonus depreciation. The same business-use percentage applies to the device cost. A $1,200 phone used 75% for business: $900 deductible in year one under bonus depreciation.

Can I deduct a home phone (landline) if I use it for business?

For a first phone line into a residence, the IRS generally doesn't allow a deduction for the basic local service — even if used for business calls. You can deduct long-distance calls made for business purposes. A second line dedicated to business is fully deductible. This rule doesn't apply to cell phones or internet, which are treated more favorably.

What about streaming services or software I use for the business?

Streaming services (Netflix, Spotify) are generally personal expenses — not deductible even if occasionally used for background music in a home office. Software subscriptions used for business (QuickBooks, Adobe Creative Suite, project management tools) are deductible as business expenses. If a subscription serves both personal and business uses (a general news subscription, for example), only the business-use portion is deductible.

Tax deductions

Cell Phone and Internet Deductions for Self-Employed Business Owners

Self-employed business owners can deduct the business-use percentage of their cell phone and home internet. Most CPAs recommend tracking usage honestly — 50–80% business is defensible for most owners. S-corp owners deduct through an Accountable Plan.

Written by Matt Reese, CPA · 4 min read · Published April 2026·Share on LinkedIn

Key Takeaways

Self-employed owners deduct the business-use percentage of their cell phone bill on Schedule C. If you use your phone 70% for business and 30% personally, 70% of the monthly bill is deductible.
Home internet follows the same rule — deduct the business-use percentage. For a home office user working 8+ hours/day, 50–70% is a common and defensible business-use allocation.
A dedicated business phone used 100% for work is 100% deductible. The cleaner the record, the stronger the deduction.
S-corp owners cannot deduct unreimbursed phone/internet expenses on their personal return — TCJA eliminated that deduction for employees. Use an Accountable Plan to reimburse these expenses through the S-corp.

The business-use percentage rule

When a phone or internet service is used for both business and personal purposes, only the business-use portion is deductible under Section 162. There’s no bright-line rule for what percentage is acceptable — it should reflect your actual usage.

Realistic business-use percentages for common situations:

Business owner type	Typical business phone use	Typical business internet use
Solo service business (consultant, therapist, contractor)	60–80%	50–70%
S-corp owner with employees	70–85%	50–70%
Real estate agent / broker	70–90%	60–75%
E-commerce seller (ships from home)	40–60%	60–80%
Freelancer / side business with day job	20–50%	20–40%
Dedicated business phone (separate line)	100%	N/A

The right percentage is your actual percentage — not the highest defensible number. Most auditors accept reasonable estimates based on the nature of the business. 99% business use on a phone the owner’s family also uses is a red flag.

Calculating the deduction

Annual phone and internet deduction — self-employed consultant

Monthly cell phone bill (personal + business line)$85/month

Annual cell phone cost$1,020

Estimated business use: 75%

Cell phone deduction: $1,020 × 75%$765

Monthly home internet bill$80/month

Annual internet cost$960

Estimated business use (works from home full-time): 65%

Internet deduction: $960 × 65%$624

Total annual deduction$1,389

Tax savings at 32% federal + 9% California≈ $571

The annual tax savings from phone and internet deductions are modest — typically $400–$700 for most owners. That's still real money that takes 5 minutes to claim correctly. The bigger mistake is claiming 100% when actual business use is 60%, which creates audit exposure that far exceeds the extra deduction.

S-corp owners: the Accountable Plan requirement

The TCJA 2017 eliminated the miscellaneous itemized deduction for unreimbursed employee expenses. This means an S-corp owner who pays for their cell phone and internet personally cannot deduct those costs on their personal return.

The solution: the Accountable Plan. The S-corp reimburses the owner for the business-use percentage of phone and internet costs. The reimbursement is:

Deductible by the S-corp as a business expense
Tax-free to the owner (no W-2 inclusion, no payroll tax)

The Accountable Plan requires substantiation — receipts and a documented business-use percentage. Monthly reimbursement based on the owner’s actual bills works well.

Document the business-use percentage annually

Each year, note your estimated business-use percentage in writing (even a brief email to yourself or your CPA). If questioned, you want contemporaneous records rather than reconstructed estimates. For most business owners, a consistent 60–75% phone / 55–65% internet allocation is supportable without detailed logs.

You might also read

S-corp planning

The S-Corp Accountable Plan: Reimburse Yourself Tax-Free for Business Expenses

S-corp owners can't deduct unreimbursed employee expenses on their personal return. An Accountable Plan lets the corporation reimburse you for home office, vehicle, phone, and other expenses — tax-free to you, deductible by the corporation.

Tax deductions

The Home Office Deduction: Who Qualifies, How to Calculate It, and Which Method Saves More

Self-employed business owners can deduct the business-use portion of their home — but only if it meets the exclusive-use test. Simplified vs actual method, S-corp Accountable Plan, and what the IRS looks for.

Tax deductions

What Counts as a Business Write-Off?

The ordinary-and-necessary standard, common deductible expenses, and why personal charges don't become write-offs just because they clear the business account.

Sources & References

Frequently asked

Questions owners actually ask

Do I need to track every call to prove business use?: The IRS doesn't require call-by-call logs for cell phones. A reasonable estimate based on your actual usage pattern, documented at the time, is sufficient. Many practitioners recommend a one- or two-week log once a year to establish the ratio, then apply that consistently. Claiming 100% business use on a phone that clearly has personal use is an audit risk.
Can I deduct a separate phone I use only for business?: Yes — a phone used exclusively for business purposes is 100% deductible. Many business owners maintain a second line or device for business calls and text. A separate number for client communications creates a clean deduction with no personal-use allocation required.
What about the phone purchase itself (the device)?: A cell phone purchased for business is a depreciable asset — or immediately expensable under Section 179 or bonus depreciation. The same business-use percentage applies to the device cost. A $1,200 phone used 75% for business: $900 deductible in year one under bonus depreciation.
Can I deduct a home phone (landline) if I use it for business?: For a first phone line into a residence, the IRS generally doesn't allow a deduction for the basic local service — even if used for business calls. You can deduct long-distance calls made for business purposes. A second line dedicated to business is fully deductible. This rule doesn't apply to cell phones or internet, which are treated more favorably.
What about streaming services or software I use for the business?: Streaming services (Netflix, Spotify) are generally personal expenses — not deductible even if occasionally used for background music in a home office. Software subscriptions used for business (QuickBooks, Adobe Creative Suite, project management tools) are deductible as business expenses. If a subscription serves both personal and business uses (a general news subscription, for example), only the business-use portion is deductible.

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Educational content only.This article is for informational purposes and does not constitute tax, legal, or investment advice. Every owner’s facts are different; consult a qualified CPA and advisor before acting. Tax and accounting services are provided through Matt Reese, CPA; investment advisory services are provided through Measured Risk Portfolios, a registered investment adviser. Matt Reese, CPA and Measured Risk Portfolios are separate entities; clients are not required to engage both.