The release of the iPhone 5 swept the nation, and tech consumers had yet another reason to drool.
But at what cost? It’s expensive to stay ahead of the electronics race. The running joke about the iPhone (and just about every other type of electronic device) is that “Your gadget is out of date the moment you buy it and walk out of the store.”
Spending all of this hard earned dough to remain king of the electronics mountaintop begs the question – Can I deduct my iPhone 5? Can I write off my new computer or my monthly cell phone service costs? What about my printer, ink cartridges, or any of my electronics . . . can I deduct those expenses from my taxable income?
The short answer is a resounding: Yes! But, as with everything tax related, you have to pay attention to the rules.
Writing Off Your iPhone 5 and Other Mobile Devices
Let’s stay out of the iPhone/Android debate for a moment. No matter which smartphone you’ve chosen, there are two things that every carrier demands; you have to buy a phone and you have to pay for service.
So how do you deduct these expenses? Well, you have to meet the basic criteria that the IRS puts forth when dealing with such issues:
- you have to itemize your deductions, and
- you have to use your phone for only your business or place of employment.
The standard deduction doesn’t not allow you to add on your mobile device costs. Sorry, but you’ll have to itemize if you want to deduct mobile device expenses. TurboTax will help you figure whether you can itemize your deductions or take the standard tax deduction. You don’t need to know which one to take.
If you’re self employed, you have the ability to deduct all of your cell phone expenses (initial purchase and monthly bill) as long as the phone is used for business purposes – exclusively.
If you aren’t self employed but your phone expenses are required by your employer and you don’t receive reimbursement, you also have the right to deduct all of your cell phone expenses from your taxable income.
Again, to deduct 100% of your cell phone costs, the IRS demands that the phone and service in question be used exclusively for business.
Personal and Business Use
If your phone doesn’t fall into the “exclusively for business” category, don’t worry, the IRS hasn’t completely forgotten about you.
If your new cell phone acts as both your business and personal phone, you are only allowed to deduct the portion used for business from your taxable income. It’s important for you to hang on to your itemized phone bill and receipts to ensure that you’re deducting the right amounts and to keep records of your deduction.
Deducting Other Business Assets
As it turns out, you are able to deduct much more than your cell phone costs. In the same way that you expense your costs from a business trip, the government also allows you to deduct electronics purchases as long as they’re reasonably necessary for your business.
Or as the IRS puts it, you are able to deduct depreciating expenses if those expenses help you to generate income.
Expenses that fit into this category range from new computers, printers, leased equipment, software, monitors, computer peripherals, and so on. Basically, anything that you deem necessary for your business or necessary for you to continue earning income can be deducted.
Just remember to save your receipts and keep good records.