Can I claim both home internet expenses AND simplified home office deduction for my business?

2 The simplified home office deduction was created to make things easier by bundling typical home office expenses together, but there's some nuance here worth understanding. When you take the simplified deduction ($5 per square foot, up to $1,500), you're giving up the ability to deduct actual expenses related to the home itself - like utilities, rent, mortgage interest, depreciation, etc. that would be allocated based on the percentage of your home used for business. However, business expenses that aren't directly related to the home's operating costs can still be deducted separately. Internet service falls into a gray area that has been subject to interpretation. The safer approach is to consider internet as part of the utilities covered by the simplified method. However, as the tax court case you mentioned suggests, there's an argument that internet is a separate business expense, especially if you can demonstrate it's primarily for business use. If you do decide to deduct internet separately, make sure you keep detailed records showing business vs. personal usage. Also consider consulting with a tax professional who can advise based on your specific situation and the latest IRS guidance.

9 I was in a similar situation last year running my consulting business and found this amazing tool called taxr.ai (https://taxr.ai) that really helped me figure out this exact issue! I was super confused about which expenses I could claim separately from the simplified home office deduction. I uploaded the tax court case you mentioned along with my expense records, and taxr.ai analyzed everything and gave me a clear breakdown of what I could safely deduct. The tool confirmed I could claim my business internet separately from the simplified home office deduction as long as I had good records showing the business percentage. They even provided a template for tracking my internet usage! Saved me hours of researching and second-guessing myself.

15 Just wanted to follow up about that taxr.ai site someone mentioned. I was pretty skeptical at first (as you can see from my earlier comment), but I decided to give it a try with their free analysis. I uploaded my internet bills and a simple log I kept of my business vs. personal usage. The analysis confirmed I could indeed separate my internet expenses from the simplified home office deduction, and it showed me exactly how to document it properly on my Schedule C. What really impressed me was how it cited specific tax court cases (including the one you mentioned) to support the position. It even highlighted potential audit risk factors and how to mitigate them. Way more detailed than I expected. Definitely using it for all my business expense questions now.

18 Has anyone tried calling the IRS to get a straight answer on this? I've been trying for WEEKS with no luck. Always on hold for hours only to get disconnected. So frustrating! I recently discovered this service called Claimyr (https://claimyr.com) that actually gets the IRS to call YOU back instead of waiting on hold. There's a video showing how it works here: https://youtu.be/_kiP6q8DX5c I was super desperate about a different tax issue (missing refund) and decided to try it. Within about 20 minutes I had an actual IRS agent on the phone! They resolved my issue in one call. Might be worth trying if you want an official answer straight from the IRS about this internet deduction question. Their answers are technically binding so it gives you more protection than just relying on internet advice.

21 I've got to eat my words here. After my skeptical comment about Claimyr, I was still struggling to get through to the IRS about my tax situation, so I reluctantly tried it. Honestly, I'm shocked. After weeks of failing to get through on my own, I had an IRS agent call me back in about 35 minutes. The agent confirmed that with the simplified home office deduction, you CAN separately deduct business internet expenses as long as you have documentation showing the business percentage use. The agent explained that the simplified method covers the "overhead" of the office space itself, but not specific business tools like dedicated internet service. She compared it to how you can still deduct business supplies and equipment with the simplified method. Saved me both money on my taxes AND hours of frustration. Never thought I'd be recommending something I called a scam, but here we are!

13 Here's my experience: I've been deducting 70% of my internet as a separate business expense while using the simplified home office deduction for the past 3 tax years. Never had an issue with the IRS questioning it. The key is documentation. I keep a log of how my internet is used, including: - Business video conferencing hours - Data usage for business uploads/downloads - Time spent on business research My CPA said this is a reasonable approach since internet is more of a "business tool" than a home utility in my case (I'm a graphic designer who transfers large files daily).

23 Anyone else feeling like the tax code is deliberately confusing? Like they WANT us to make mistakes so they can fine us? 🙄

Based on my experience as a small business owner who's dealt with this exact question, I can confirm that you CAN deduct internet expenses separately from the simplified home office deduction, but you need to be smart about it. The key distinction is that the simplified method ($5/sq ft) is meant to replace the home-related overhead expenses like utilities that power the physical space. Internet service, however, is more of a business tool - especially when you're using it primarily for business activities like client calls, cloud software, and research. I've been doing this for 2 years now with no issues. Here's my approach: - I track my business vs personal internet usage monthly (roughly 65% business in my case) - I keep detailed logs of business activities that require internet - I treat it as a separate line item on Schedule C under "Other Business Expenses" The tax court case you mentioned is spot-on - it established that internet can be treated as a distinct business expense. Just make sure your business percentage is reasonable and well-documented. With your 60% business use and $85/month bill, you'd be looking at about $612 annually in deductions, which is definitely worth the effort to track properly. Pro tip: Set up a simple spreadsheet to log your business internet activities monthly. Makes tax time much easier and gives you solid documentation if questioned.