Self-employed individuals can claim the percentage of their phone bill that directly relates to business use, typically by identifying business calls, data, and texts on an itemized statement. If 30% of usage is for business, you can deduct 30% of the bill. Using a dedicated business phone allows for 100% deduction.
Key Takeaways
If you're self-employed and you use your cellphone for business, you can claim the business use of your phone as a business deduction. You can only deduct the percentage of the cost that applies to the business use of your cellphone.
If you had a separate phone used only for business, you could potentially claim 100% of its costs. If you are VAT registered, you may also reclaim the VAT proportion corresponding to your business use (unless you're under a flat rate VAT scheme).
Cell phones and internet deductions
The answer is, you have to prorate the expense and only deduct the business use portion. So if 30% of your calls are personal, for example, you can only deduct 70% of the phone's expense.
Only the business portion is deductible.
You need to determine what percentage of your cell phone usage is for business. For example: If 70% of your calls, apps, and data usage are business-related, you can claim 70% of your phone bill as part of your home office expenses.
Many business expenses are 100% deductible, including advertising, employee wages, rent, supplies, and certain business meals like company parties or meals for the public, while personal deductions like student loan interest or charitable donations (depending on the type) can also be fully deductible for individuals. The key is that the expense must be "ordinary and necessary" for your trade or business or meet specific IRS criteria, often differentiating from the 50% rule for client meals.
The IRS allows taxpayers to deduct up to $3,000 of realized investment losses ($1,500 if married filing separately) against ordinary income each year. This deduction applies only to losses in taxable investment accounts and must be realized by December 31st to count for that tax year.
The IRS doesn't have a specific dollar limit for hobby income; instead, it focuses on profit motive: if you intend to make a profit, it's a business, but if it's for fun, it's a hobby, and you must report all income but can't deduct losses. Key is that you report all hobby income on Form 1040 as "other income," and if net earnings from self-employment are $400 or more, you owe self-employment tax, even if it's a side gig. The main difference from business is that you can't deduct hobby expenses (under current law) and must report all profits.
The section 179 deduction allows taxpayers, other than trusts and estates, to elect to expense a specified amount of the cost of qualifying property purchased for use in a business. For tax years beginning in 2026 the maximum deduction is $2,560,000, (2025, the maximum deduction is $2,500,000).
You can claim a mobile phone on tax if you use it to earn assessable income, and the expense is not private in nature. This applies to: Employees who use their personal phone for work. Sole traders who use their phone to run their business.
If you take a tech deduction, the IRS may ask for documentation—receipts, canceled checks, invoices, or bank records—for the expenses.
It's very similar to deducting computer expenses: you can only write off your business-use percentage. That means that, if you use your phone for work 60% of the time, you'd be able to write off 60% of your phone bill.
You can deduct these expenses whether you take the standard deduction or itemize:
You can estimate this using a simple percentage. For example, many freelancers who rely heavily on home internet may deduct 50% or more of their internet bill. Light work use would require a lower percentage.
The "3-year hobby rule," or IRS Hobby Loss Rule, is a tax guideline stating that if an activity makes a profit in three out of five consecutive years, the IRS presumes it's a legitimate business for tax purposes, not a hobby, allowing for business expense deductions; otherwise, it's presumed a hobby, and losses can't offset other income. The IRS examines factors like business-like operations, expertise, and time spent, but the profit test is a strong indicator, with exceptions for horse-related activities (2 of 7 years).
The Internal Revenue Code allows taxpayers to claim a capital loss deduction from their annual capital gains. Capital loss deductions from regular income are limited to $3,000 a year. Losses over this limit can be carried forward and claimed in future tax years if you make use of a capital loss carryover.
Tax loss harvesting is a fundamental idea that reduces the tax burden resulting from short-term and long-term investment profits. However, the strategy should only be used for tax planning and not be employed as a portfolio management tactic since its frequent use may amplify losses.
HMRC allows you to claim self-employed meal allowance if you're staying away from home overnight on a business trip. In this case, to be eligible to claim, you must meet the following conditions: The expenses incurred on foods and drinks must be during your business travel only.