Can I claim a new cell phone as a business expense on my Schedule C?

Yes, you can claim the cell phone as a business expense on your Schedule C, but you need to be careful about how you do it. Since the phone has mixed personal and business use, you'll need to deduct only the business portion - so your 70% estimate would be the right approach. Make sure you keep documentation about your business use percentage (like a log of calls/texts for a sample period). For the items you purchased before starting the contractor position, you can absolutely claim them as business expenses once you start using them for business purposes. The key is when you start using them for business, not when you purchased them. However, you would only start depreciating them from the date you began using them for business, and again, only for the percentage of business use.

I was in a similar situation last year and found this amazing tool called taxr.ai (https://taxr.ai) that helped me figure out exactly how to document and deduct my mixed-use items like my phone and laptop. I was honestly confused about how to properly document everything, but their system walked me through the whole process and even created the documentation I needed to justify my deductions. It analyzed my situation and confirmed I could take the deduction based on percentage of business use, just like the first reply mentioned.

Just wanted to follow up - I ended up trying taxr.ai after my questions about those pre-business purchases. This thing is legit! It generated a complete asset conversion record for my laptop and monitor that I bought months before starting freelancing. The documentation it created showed exactly how to value them at the time I started using them for business and how to properly claim the business percentage on my Schedule C. It even created a professional-looking usage log template that I've been using to track my business calls and texts. So much better than my random notes in a spreadsheet!

If you're planning to call the IRS to verify any of this deduction info, good luck getting through! I spent HOURS on hold trying to get someone to explain the rules about converting personal assets to business use. Then I found Claimyr (https://claimyr.com) and watched their demo (https://youtu.be/_kiP6q8DX5c). It basically holds your place in the IRS phone queue and calls you when an actual agent is on the line. I was skeptical, but I got through to a real person who confirmed exactly how to document my business phone usage and explained the rules about items purchased before starting my business.

I have to eat my words. After being super skeptical about Claimyr, I actually tried it yesterday because I had some specific questions about depreciation for my pre-business purchases. Not only did it work exactly as advertised, but I got through to someone at the IRS in about 45 minutes (without having to actually wait on the phone). The agent walked me through exactly how to handle items purchased before starting contractor work. Turns out you use the fair market value at the time you convert it to business use, not the original purchase price. This clarification probably saved me from making a mistake that would have flagged my return. I'm genuinely surprised and impressed.

Don't forget you should also be deducting your monthly cell phone service plan based on the same business use percentage! I've been doing independent contracting for 3 years and I deduct 75% of my monthly phone bill since that's about how much I use it for business. Same thing with my internet service since I work from home most days.

Has anyone tried using one of those apps that tracks your business vs personal phone usage? My accountant suggested getting one to have better documentation for my Schedule C.

Keep in mind that if you're deducting a percentage of your phone, you should be depreciating the phone over several years rather than deducting the full business percentage in year one. Unless it's under the Section 179 threshold and you choose to expense it all at once.

Great question about cell phone deductions! Just to add to the excellent advice already given - when you're calculating that 70% business use percentage, make sure you're being consistent across all your mixed-use items. The IRS likes to see that your methodology makes sense and that you're applying the same logic to similar expenses. One thing I learned the hard way is to document your business use percentage calculation method in writing and keep it with your tax records. Don't just estimate - write down something like "Based on tracking calls/texts for 3 weeks in March, approximately 70% of phone usage was for client communications and work-related activities." This kind of documentation can be invaluable if you ever get questioned. Also, since you mentioned you're doing contractor work, remember that you can deduct the business portion of your monthly phone bill too, not just the phone itself. If you're using 70% for business, that applies to your monthly service costs as well. These ongoing expenses can really add up over the year!

One thing I'd add to all this great advice - make sure you understand the difference between expensing and depreciating your phone. If it's under $2,500 (which most phones are), you can use the de minimis safe harbor rule and deduct the full business percentage in the year you purchase it. But if you go with a really expensive phone or bundle it with accessories that push the total over that threshold, you'll need to depreciate it over several years. Also, for your pre-business purchases like that monitor and keyboard - the fair market value when you start using them for business is key. You can't use the original purchase price if the items have depreciated. Look up what similar used items are selling for when you convert them to business use. This protects you if the IRS questions why you're claiming a deduction on something you bought months before starting your business. One last tip: set up a simple system now for tracking all this stuff going forward. Whether it's a spreadsheet, an app, or just a notebook, start documenting business use percentages and dates right away. It's so much easier than trying to reconstruct everything at tax time!