Phone, Internet, and Computer: Deducting Mixed-Use Costs
How to deduct the business share of things you also use personally, the records that support the percentage, and the rules for converting personal items to business use.
Reviewed by the Fairlight Accounting cross-border tax team — U.S. & Canadian Tax Desks
A phone, internet service, or computer used for both business and personal purposes is deductible only for the business share, based on a reasonable allocation you can support. A plan used 70 percent for business yields a 70 percent deduction. Items you already owned and bring into the business start from the lower of cost or value at conversion.
On this page
How is the business share determined?
| Item | Typical allocation method | Notes |
|---|---|---|
| Cell phone plan | Business minutes or data as a share of total, or a reasonable estimate from usage patterns | A second line used only for business is fully deductible |
| Home internet | Share of hours or devices used for business | The home office percentage is not automatically the right figure; base it on actual business use |
| Computer or tablet | Business hours as a share of total use | Logs for the first few months establish the pattern |
| Software subscriptions | Fully deductible if business-only; otherwise allocated | |
| Vehicle | Business miles over total miles | Separate rules; see the vehicle guide |
Round-number 100 percent claims on devices that obviously see personal use are hard to defend if the IRS asks for support.
How are the items themselves deducted?
- Under the de minimis safe harbor (an annual election; $2,500 per item or invoice, or $5,000 with an applicable financial statement), the business share of a phone or laptop is expensed in the year bought.
- Above that, the business share is depreciated — computers over five years — or expensed under Section 179 (which requires more than 50 percent business use in the year placed in service) or bonus depreciation (100 percent for property acquired and placed in service after January 19, 2025).
- Converted from personal use, the starting point is the lower of what you paid and the fair market value on the conversion date, times the business percentage.
Cell phones (for tax years beginning after 2009) and computers (placed in service after 2017) are no longer "listed property," so the strict listed-property substantiation rules and business-use tests no longer apply to them; you still need reasonable records supporting the business percentage.
What about employer-provided phones?
A phone the business provides to an employee primarily for business reasons — availability to clients, contact outside hours — is a tax-free working condition benefit, and the employee's personal use is treated as a de minimis benefit. Reimbursing the business use of an employee's own phone at a reasonable amount, where there are substantial business reasons for it, is generally also tax-free. A flat "phone allowance" that is not tied to a business need or to actual costs is generally wages.
How does this work for S corporation owners?
The corporation can own the phone and pay the plan, or reimburse the owner's business share under an accountable plan. Either way, the deduction belongs to the corporation; an owner cannot deduct it personally.
Frequently asked questions
Can I deduct my whole internet bill if I have a home office?
Only the business share. The home office percentage of the home does not automatically apply to internet; use a usage-based estimate.
Does buying a new laptop for the business mean I can deduct the old one too?
The old one is deductible only to the extent it is used in the business, from its value at conversion.
Are phone accessories and repairs deductible?
Yes, at the same business percentage.
What records should I keep?
Bills, a note of the allocation method, and a usage sample from a representative period; update the percentage if use changes.
Official sources
The IRS explains: “If you have an expense that is partly for business and partly personal, separate the personal part from the business part. The personal part is generally not deductible.” — Internal Revenue Service, Publication 334 (2025), Tax Guide for Small Business, https://www.irs.gov/publications/p334
The IRS explains: “If you held property for personal use and later use it in your business or income-producing activity, your depreciable basis is the lesser of the following.” — Internal Revenue Service, Publication 946 (2025), How To Depreciate Property, https://www.irs.gov/publications/p946
Next step
Fairlight Accounting handles U.S. domestic, cross-border (U.S.–Canada), and international tax returns, plus bookkeeping, payroll, and CFO advisory. Our U.S. Tax Desk sets the business-use percentages once and books them consistently each month. See pricing or book a free fit call.
Cross-border taxes, handled in one place
U.S. and Canadian filings prepared together by our U.S. and Canadian Tax Desks.
Book a free fit call