Cell Phones and the IRS

Since 1989, the Internal Revenue Service has considered cell phones "listed property," which basically means they can be purchased for business or commercial use but can be used for personal needs as well. Therefore, claiming tax deductions for your iPhone will involve proving its value to your business. The IRS closely monitors such deductions for tax fraud.

Qualifications

The first qualification you must meet before claiming a tax deduction for your iPhone is proving that it is both an "ordinary" expense and a "necessary" expense for your job. This is usually simple to achieve as "ordinary" means the phone is common in your field and "necessary" is defined as helpful or integral in the process of your work. You also may justify deducting iPhone expenses by showing that having and using one is part of your terms of employment if you are not self-employed.

Percentage of Expenses to Claim

You will need to keep track of your monthly itemized bills or create a log of your phone calls. This bill or list should show every phone call made or received and you will need to categorize the purpose or business relevance of each call. You cannot just estimate the percentage of your usage for tax deduction or simply claim the whole expense.

Depreciation

Depreciation is the process of reducing the amount of tax deduction you are claiming for a specific item, in this case your iPhone, because you can't simply claim 100 percent of the expenses for listed property. Based on your itemized bills or call logs, if you fall into the "more than 50 percent use" bracket, you can claim what is called accelerated depreciation and may be able to use the Section 179 deduction for the year your iPhone service started. If you do not fall into this bracket or use less than 50 percent of your iPhone expenses for business purposes, you must use the straight line method of depreciation and therefore will not qualify for the Section 179 deduction.

Expert Insight

Be careful not to file your iPhone deduction under "Office Equipment Expense" because it is considered listed property. Lisa Shaw, writing for Outright.com, states that apps purchased for business use are also deductible. These often include budgeting, stock market and other useful apps found in the App Store. However, these apps will fall under the category of "Office Expenses" on your tax deductions.