TurboTax / Tax Calculators & Tips / All Tax Guides / Tax Deductions and Credits / Mobile Phones, Internet and Other Easy Tax Deductions

Mobile Phones, Internet and Other Easy Tax Deductions

Updated for Tax Year 2014


You may be able to take a tax deduction on the cost of some of high-tech gadgets that help you streamline your work.

Get every deduction you deserve

TurboTax Deluxe searches more than 350 tax deductions and credits so you get your maximum refund, guaranteed.

For only $54.99*
Start for Free

The world of high-tech gadgetry and connectivity continued to evolve at a dizzying pace during the first decade of the 21st century. Cell phones, laptops, iPads and the Internet became more than ways for people to communicate or entertain themselves: For many, they are now required equipment for running a business. The Internal Revenue Service kept abreast of the changes, and it is possible to deduct the cost of some items used for business. This means the high-tech gadgets that help you streamline your work can pay for themselves come tax time.

"The IRS’s standard for a legitimate deduction requires the item to be a usual, necessary, customary and reasonable expense for your type of work. So, an iPad will most likely be viewed more as a legitimate deduction for a computer consultant than for someone who works on an assembly line."

- Michael Carney, owner and president of Chicago-based MWC Accounting


Applicable deductions

Your computer, cell phone, Internet service, software and even some cool tech gadgetry are possible tax deductions if you must use them to run your business. Michael Carney, owner and president of MWC Accounting in Chicago, said expensive tech hardware can qualify if it is an asset that retains its value over several years. The taxpayer has a choice on how to deduct the costs of those items.

“You can depreciate them, spreading the deduction over the number of years the IRS considers to be the shelf-life for this item, or you can write the entire cost off for the year of purchase," Carney said.

"Your choice between the two depends on your projected income and other expenses going forward. If you had a big year and want to reduce your profits to minimize the tax bite, it’s best to write the entire cost off."

Carney said this strategy means you will have less to deduct in the coming years.

Also, with most tech gadgets, you can claim a percentage of time that you used that device for business purposes. Most pros caution against claiming 100 percent.

“People will buy a computer and will use it exclusively for business,” said Illinois-based certified public accountant Neil Johnson — also known as "The Tax Dude" — “but, it might be a bit of red flag to the IRS to claim that. Most people will, at the very least, periodically check the news or their personal email account on their work laptop or desktop.”

Internet use and cell phone costs qualify too. “As far as Wi-Fi goes, when I am on a plane, I always buy the Internet package, because I am always working, and this is an expense that is easy to forget about come tax time," Johnson said. "As far as cable or satellite TV goes, it truly depends upon your profession. … If you’re in an ad agency, you can write that off for sure. If you work in construction, not so much. In the past, you would have to tally up the minutes you used (on cell phones) for personal versus business expenses. Now you can just write off a percentage of business use. Just do not say 100: That won’t fly.”

You may have some explaining to do if you claim a newer-generation tech-toy, such as an iPad, as a business expense. The experts say such devices tend to be viewed as perks rather than necessary business tools.

“The IRS’s standard for a legitimate deduction requires the item to be a usual, necessary, customary and reasonable expense for your type of work,” Carney said. “So, an iPad will most likely be viewed more as a legitimate deduction for a computer consultant than for someone who works on an assembly line.”

Documentation counts

If you plan to take a tech deduction, Carney's No. 1 tip is that you keep good books all year.

"It makes your life so much easier when it comes to tax time," he said. "Keep reasons for purchasing things, where you traveled (and) why. Tech helps there, too: Use your cell-phone calendar or track the data in an Excel program. It absolutely should not produce angst."

Carney says you have to remember the bottom line with the IRS is any item or expense you write off has to make sense with your business.

John Topham, a CPA and founding partner of Damon, Topham & Co. in Boston, agrees with Carney's suggestion.

“It’s all about documentation, which means receipts, canceled checks, invoices and other backup," he said. "These are employee business expenses, which fall under the IRS contemporaneous records requirement.”

What does this mean to you? It means you must keep a log of activity, including date, business purpose or task, and the time spent on that task, Topham said. If you log 1,200 hours on a computer in a year, and 400 of them are business-related, one-third of the related expenses are deductible that year.

"If the expense is clearly business-related, such as industry-specific, a log is not necessary," Topham said. He said you should not deduct clearly personal expenses like gaming systems.

While personal computers for family use are not deductible, college students filing income taxes may qualify for the Lifetime Learning Credit, the Hope Scholarship Credit, or the American Opportunity Tax Credit. The student's personal computer may be deductible if her college or university includes the use of its computers in the cost of tuition, or bills students for computer software that students cannot obtain elsewhere.

Spend to save

John Topham, founding partner of Damon, Topham & Co. of Boston, points out that employees who receive a Form W-2 report their business expenses on Form 2106. The reported expenses are subject to a 2 percent adjusted gross income limitation. This means if your adjusted gross income is $100,000, the limit or floor is $2,000. You would need $2,001 in expenses to deduct the first $1 in expense.

“To be deductible these must be an ordinary and necessary (expense) and paid or incurred in carrying out required employment activities and duties," Topham said. "Key deductions would be auto and travel, meals and entertainment and miscellaneous employee business expenses."

Miscellaneous employee business expenses, Topham noted, would "high-tech" items.

The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.

DAYS left
LAST DAY to file
1 DAY left
to file your taxes by April 15
2014 taxes due today
Start for Free
* Important Offer Details and Disclosures
  • Try for Free/Pay When You File: TurboTax online and mobile pricing is based on your tax situation and varies by product. Actual prices are determined at the time of print or efile and are subject to change without notice. Special discount offers may not be valid for mobile in-app purchases.
  • TurboTax CD/Download products: Price includes tax preparation and printing of federal tax returns and free federal efile of up to 5 federal tax returns. Additional fees apply for efiling state returns. E-file fees do not apply to New York state returns. Prices subject to change without notice.
  • TurboTax Mobile: Actual prices are determined at the time of print or efile and are subject to change without notice. Come back here before you file to confirm that the price has not changed, especially if it's been a while since you downloaded this app.
  • Anytime, anywhere: Internet access required; standard message and data rates apply to download and use mobile app features and content. TurboTax mobile app devices supported include Android 4.1 and above, iOS 8 on iPhone 4s and above, and iPad 2.
  • Fastest refund possible: Fastest tax refund with efile and direct deposit; tax refund timeframes will vary.
  • Pay for TurboTax out of your federal refund: A $34.99 Refund Processing Service fee applies to this payment method. Prices are subject to change without notice.
  • About our TurboTax Product Experts: Customer service and product support (phone or chat) vary by time of year. Phone support not included with Free Edition.
  • About our credentialed tax experts: Live tax advice service is available for your toughest tax questions; fees may apply. Service, experience levels, hours of operation and availability vary, and are subject to restriction and change without notice. Click here for full terms and conditions. Not available for TurboTax Business customers.
  • Get up to 10% on top of your federal refund: Amazon.com Gift Card offer is for federal refunds only. Limits apply ($2000 per e-card, maximum $10,000 per customer). Offer available only for TurboTax Online (except Federal Free Edition) or CD/download versions sold and shipped, or downloaded directly from Intuit or Amazon. Except as required by law, Amazon.com Gift Cards cannot be canceled, transferred for value or redeemed for cash.

    Amazon.com is not a sponsor of this promotion. Except as required by law, Amazon.com Gift Cards ('GCs') cannot be transferred for value or redeemed for cash. GCs may be used only for purchases of eligible goods at Amazon.com or certain of its affiliated websites. For complete terms and conditions, see www.amazon.com/gc-legal. GCs are issued by ACI Gift Cards, Inc., a Washington corporation. All Amazon ®, ™ & © are IP of Amazon.com or its affiliates. No expiration date or service fees.
  • #1 best-selling tax software: Based on aggregated sales data for all tax year 2013 TurboTax products.
  • 4.8 out of 5 stars: Average based on customer ratings on TurboTax.com for TurboTax Online and CD/download products tax year 2014, as of January 2015.
  • Most Popular: TurboTax Deluxe is our most popular product among TurboTax Online users with more complex tax situations.
  • TurboTax CD/Download priority phone support: Priority phone support for TurboTax CD/Download Premier and Home & Business is accessible exclusively via the TurboTax.com Help Center.
  • Benefit Assist: After you file, TurboTax automatically shows you a full list of government benefits you may qualify for, like Food Stamps or reduced phone & utilities. Plus, we help you apply, saving you time and making it easier than ever to get more money! Estimate based on calculation of Benefit Assist users from tax year 2013 and published reports of average benefit and savings amounts from federal and state programs. Actual amounts and qualifications based on your individual situation; some individuals will not qualify. Feature may not be available for all customers.
  • Simplified State Experience: New, simplified state tax preparation available for most filers.
  • Eligibility for $25 cash back for returning Deluxe customers: Customers who have completed their 2013 taxes in TurboTax Deluxe (CD or download), and have completed their 2014 taxes in either TurboTax Premier or TurboTax Home & Business (CD or download), and apply here before 11:59PM PDT April 20, 2015, are eligible for $25 back. 2014 TurboTax Advantage users are ineligible for this offer. Terms and conditions are subject to change without notice.
  • $0 Upgrade Offer: Valid for customers who filed their 2013 taxes with TurboTax Deluxe (CD or download), completed prior year data transfer this year, and encounter an upgrade to either 2014 TurboTax Premier or 2014 TurboTax Home & Business (CD or download). Valid February 6, 2015 through April 20, 2015. TurboTax Advantage users are ineligible for this offer. This offer may not be combined with our $25 cash back offer. Terms and conditions are subject to change without notice.