home phone

[taxea]

I would think the argument will only hold up if the office was detached from the home.

Perhaps but under all the current circumstances re cell phones, I still believe it is a reasonable argument. I have had success with the IRS in the pass and if I feel I can justify the expense and only if the client wants to after I clearly explain the pros and cons. In this case I just don't think the IRS has caught up with modern times. If the client doesn't want to take the chance then I don't include it. I put no pressure on the client.
At times I have contacted the IRS to get their reading on the scenero (sic). This way I have a name and ID and it falls on the IRS for providing misinformation.

[FEDUKE404]

Old rules for a new environment

Is there IRS "tax advisors" with higher up powers that be? If you were to call the IRS "tax advisor", for what reason would you think they would tell you any different than:

Telephone. The basic local telephone service charge, including taxes, for the first telephone line into your home (i.e., landline) is a nondeductible personal expense. However, charges for business long-distance phone calls on that line, as well as the cost of a second line into your home used exclusively for business, are deductible business expenses. Do not include these expenses as a cost of using your home for business. Deduct these charges separately on the appropriate form or schedule. For example, if you file Schedule C (Form 1040), deduct these expenses on line 25, Utilities (instead of line 30, Expenses for business use of your home).

http://www.irs.gov/publications/p587...link1000226332

I've been around long enough to encounter all of the "reasons" to deduct some/all of basic telephone service. "I'm on call" or "my boss requires me to have a phone" and such.

I was never quite so happy as when the IRS firmly slammed the door by saying no matter what you called it, the basic charges for the first phone ("landline" was never an issue) were never an allowable deduction.

Of course, now everyone has cell phones and many people have no landlines. So we've come full circle, i.e. back to the "reasons" to deduct some/all of the basic monthly cell phone charges.

It would be nice if the IRS could, once again, give us some reasonable guidelines for the world of 2012.

But I'm not holding my breath....

FE

[taxea]

Most ISPs that I know of provide internet service at a flat rate per month. Unless you have some internet service that charges you according to your usage, how could you possibly allocate the cost between personal and business? Your incremental cost of using the internet for business is -zero-.

[The same comment applies to most long-distance phone plans. They no longer charge by the call.]

hours used for personal vs hours used for business, each divided by the total bill. Then you multiply the percentage for each by the total bill. Wallaaa, you have the allocation for each.

[Jesse]

A cell line is not a landline

Is there IRS "tax advisors" with higher up powers that be? If you were to call the IRS "tax advisor", for what reason would you think they would tell you any different than:

Telephone. The basic local telephone service charge, including taxes, for the first telephone line into your home (i.e., landline) is a nondeductible personal expense. However, charges for business long-distance phone calls on that line, as well as the cost of a second line into your home used exclusively for business, are deductible business expenses. Do not include these expenses as a cost of using your home for business. Deduct these charges separately on the appropriate form or schedule. For example, if you file Schedule C (Form 1040), deduct these expenses on line 25, Utilities (instead of line 30, Expenses for business use of your home).

http://www.irs.gov/publications/p587...link1000226332

[AJsTax]

The rule says the "charge"

for the basic phone service in the home is a personal expense. If the line costs a lot more than what a basic line costs in the area then the balance of the cost might be business expense, depending on other factors. Note it says the charge for basic service.
I often use this. Phone charge is $100 per month due to business line and yellow page listing, the basic cost in the area is $25, the balance of $75 may qualify for a business deduction if the use qualifies it.

[Larmil]

Yes, it's in the code. Yes, we have to follow the code no matter how stupid or outdated. In the scenario posted where it is very clear that the phone is business only I would be more than interested knowing if Appeals or a Court would have their common sense actually override the tax code.

What court has the authority?

[Gretel]

Yes, it's in the code. Yes, we have to follow the code no matter how stupid or outdated. In the scenario posted where it is very clear that the phone is business only I would be more than interested knowing if Appeals or a Court would have their common sense actually override the tax code.

[dan doshan]

as the primary phone an arguement could be made that this is a second line into the home

Guess you could make that argument but that would make one look like a politician. Trying to have things both ways. I think it is what it is. As posters have mentioned that is one thing that does appear to be quite clear. No deduction for the main phone line into the home. Lets not try and goof things up. I like it clear cut that way. Now if and when someone fights this in tax court and wins and or the IRS / Congress changes the rules then so be it.

[Larmil]

a separate fax line, long distance for business are deductible and I think with the advent of cell phones being used so commonly as the primary phone an arguement could be made that this is a second line into the home. If you are reluctant to deduct it, call the IRS hotline and ask to speak to a tax advisor.

I am a tax adviser.

[taxea]

a separate fax line, long distance for business are deductible and I think with the advent of cell phones being used so commonly as the primary phone an arguement could be made that this is a second line into the home. If you are reluctant to deduct it, call the IRS hotline and ask to speak to a tax advisor.

[Jesse]

Just to play devil's advocate and for thought:

If the line used for business is only located in an office dedicated to the business, an argument might be made that the phone is not coming into a residence but is coming into a business office.

Don't have any idea if it would hold up, just throwing it out for thought.

LT

I would think the argument will only hold up if the office was detached from the home.

[thomtax]

Just to play devil's advocate and for thought:

If the line used for business is only located in an office dedicated to the business, an argument might be made that the phone is not coming into a residence but is coming into a business office.

Don't have any idea if it would hold up, just throwing it out for thought.

LT

[DonPriebe]

Allocating Flat-rate Expenses

... and the internet can be allocated between business and personal ...

Most ISPs that I know of provide internet service at a flat rate per month. Unless you have some internet service that charges you according to your usage, how could you possibly allocate the cost between personal and business? Your incremental cost of using the internet for business is -zero-.

[The same comment applies to most long-distance phone plans. They no longer charge by the call.]

[Jesse]

If the phone is only used by the TP as a business phone and the internet can be allocated between business and personal then I would deduct it on the 2106. Are you doing an 8829 for this client? Does the client have an office at the employer's site?
I would have TP get a letter from the employer, on letterhead, stating that the work she does at home for the employer is for the employer's convenience and a necessary requirement of her employment. I would keep it in my client file in case any questions are raised by the IRS.

If she hasn't had a home phone for 10 years and got it as a requirement of her job and does not use it for personal calls then I think it could be justified as a business phone. As long as she understands that it is never to be used for personal calls for any reason and with the letter from the employer I would have no problem taking a home office and the phone on phone along with other 2106 expenses.

I respectfully disagree.

I don't see how this would even have a chance of standing up during an audit. The law is quite clear that the first line that comes into the taxpayer's residence is considered a personal expense. It doesn't matter who pays for that phone. If the business pays for it, then it would have it be included in wages (S/C Corp) since it is a personal expense. For a SMLLC/Ssle Prop., that is a disregarded entity which cannot deduct personal expenses.

I know this is frustrating considering how very few people need home lines for personal reasons, but it is the law. I don't see how this would pass the "more likely than not" test to prevent you from getting hit with preparer penalties.

I agree, the first landline is what it is.

Telephone. The basic local telephone service charge, including taxes, for the first telephone line into your home (i.e., landline) is a nondeductible personal expense. However, charges for business long-distance phone calls on that line, as well as the cost of a second line into your home used exclusively for business, are deductible business expenses. Do not include these expenses as a cost of using your home for business. Deduct these charges separately on the appropriate form or schedule. For example, if you file Schedule C (Form 1040), deduct these expenses on line 25, Utilities (instead of line 30, Expenses for business use of your home).

http://www.irs.gov/publications/p587/ar02.html#en_US_2011_publink1000226332

[Larmil]

Can a personal cell phone be considered the first phone line to a home?
In many cases it is the only phone in the home.

I don't think you could say it is "provided to the residence".