cell phone expenses

SBee · #1 (**permalink**) 04-09-2008, 06:59 PM

HI Tax Guru-

I am a sole proprietorship LLC. This is the second year in a row my tax professional has said I can no longer claim any land line or cellphone expenses on my taxes.
I also was not allowed to claim any of the cost of my iPhone. In the past i have only claimed about 75% of these expenses, since I sometimes can't stop my family from calling me on my cellphone.
She said it was because my ATT plan - $100/month covered the US and therefore did not incure extra long distance charges that could be attributed to business. I have gone over my allowed minutes at times, but i don't really understand this.
Anyway, I certainly want to be doing the correct legal thing and don't want to skirt a gray area. Do you have any insight into this, have you heard of any new rules?

Thanks in advance-

TaxGuru · #2 (**permalink**) 04-10-2008, 12:03 AM

Well, I think that your accountant is expressing his professional judgement and experience. But, there are some issues I have with his treatment of disallowance of the cell phone expenses.

Perhaps your Accountant should have suggested that in 2007, you ought to have got a separate cell phone that is for your business. In this manner, there would be a justification to write off 100% of your cell phone for business!

Nevertheless, most small business owners generally tend to write off 100% of their cell phone usage anyways. So, taking a 75% business usage appears to be relatively conservative in my opinion.

I think your Accountant appears right regarding your home telephone expenses being generally non-deductible, but I think the disallowance of 100 % of the cell phone expenses is unreasonable!

Clearly, being extremely conservative in itself is not bad, but for disallowing cell phone expenses altogether is really being Unfair to you! You must argue with him a little harder stating the business usage of the cell phone.

If he disagrees with your assertion, then you should consider changing your accountant or getting another CPA to take a look at your personal tax situation, just in case there are other items this CPA has overlooked!