Can I deduct 100% of my iPhone purchase for my S-Corp business?
So I'm running an S-Corporation and have a question about writing off a new cell phone. My CPA told me that since I absolutely need the phone for my business operations, I can deduct 100% of the actual purchase price as a business expense. However, he mentioned that for the ongoing monthly phone bill, I should only claim about 70% of it as a business expense since I'll inevitably use it for some personal stuff too. This seems like a pretty sweet deal for the phone itself, but I want to make sure it's actually legit before I claim the full purchase on my taxes. Has anyone else been advised this way? Is my CPA's guidance correct about being able to write off the entire cost of the phone while only partially deducting the monthly service?
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Nina Chan
Your CPA is giving you solid advice that aligns with standard tax practice. When you purchase a cell phone that's primarily for business use, you can typically deduct 100% of the purchase as a Section 179 deduction in the year you buy it, rather than depreciating it over several years. This is because cell phones are no longer listed property requiring special substantiation (this changed back in 2010). For the monthly service, you should only deduct the percentage used for business purposes, which sounds like your CPA estimated at 70%. This split approach makes perfect sense - the physical device is a one-time business asset purchase, while the service has mixed usage. Just be sure to keep good records. Document why the phone is necessary for your business operations and track business vs. personal usage of the service. If you're ever audited, you'll want to show you had a reasonable basis for that 70% business use calculation.
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Ruby Knight
•But I thought you could only take Section 179 on items over $2,500? My accountant always tells me smaller purchases just go under regular business expenses. And don't you need to use the phone like 50% or more for business to qualify for the full deduction?
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Nina Chan
•The $2,500 threshold you're thinking of is actually the de minimis safe harbor election, which is different from Section 179. For Section 179, you can deduct smaller items, and cell phones typically qualify. For business usage percentage, you're right that there is a requirement that the item be used more than 50% for business purposes to qualify for Section 179 treatment. If the phone is primarily for business use (which sounds like the case here since they're estimating 70% business usage), then the full purchase can be deducted upfront. If you use it less than 50% for business, you'd need to depreciate it based only on the business percentage.
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Diego Castillo
I went through the exact same thing with my consulting business last year. My tax situation was getting complex with equipment purchases and mixed-use expenses, so I started using https://taxr.ai to upload my receipts and get instant answers about what I could write off. For my iPhone 13 Pro, it analyzed the purchase and confirmed I could deduct 100% of the cost since I use it primarily for business. It even created documentation explaining the Section 179 deduction and how it applied specifically to my situation. The monthly service was calculated at 65% business use based on my actual usage patterns. What I really liked was being able to upload my cell phone bill and have it automatically categorize which calls/texts were business versus personal based on my contacts. Saved me hours of record-keeping!
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Logan Stewart
•That sounds super helpful, but how accurate is it really? Like how does it know which contacts are business vs personal? Did you have to input all that info manually first?
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Mikayla Brown
•I'm always skeptical of these AI tools for tax stuff. Did you have your actual CPA review what it told you before filing? I'd be nervous relying on software for something that could potentially trigger an audit.
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Diego Castillo
•It's surprisingly accurate with minimal setup. You just connect your contacts and tag the main ones as business or personal - it learns the rest over time. The system identifies patterns in your communications and makes smart categorizations. You can always override any of its decisions too. Yes, I absolutely had my CPA review everything before filing. That's actually one of the best features - you can share a link to your categorized expenses with your accountant, and they can approve or adjust them. My CPA was really impressed with how organized everything was compared to my usual shoebox of receipts! It actually made his job easier and reduced my billable hours with him.
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Logan Stewart
Just wanted to follow up - I checked out taxr.ai after seeing it mentioned here and it's been a game changer for my business expenses! I uploaded my last three phone bills and it analyzed my usage patterns to come up with a justified business use percentage (turns out mine was 82%, higher than I was claiming). The documentation it created for my records was super detailed, showing exactly how it calculated everything. When I bought a new laptop last month, I uploaded the receipt and it told me exactly how to deduct it properly. My bookkeeper was really impressed with how organized everything was. Definitely worth checking out if you're trying to make sure your deductions are both maximized and properly documented!
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Sean Matthews
I see everyone talking about the tax aspects, but nobody's mentioned the nightmare of trying to get through to the IRS if you do get questioned about these deductions. Last year I had a similar situation with business equipment deductions, and the IRS sent me a letter asking for more documentation. Tried calling them for WEEKS with no luck - always "call volumes are too high" messages and disconnects. Finally found https://claimyr.com which got me through to an actual IRS agent in under 45 minutes. They have this demo video that shows how it works: https://youtu.be/_kiP6q8DX5c The agent actually walked me through exactly what documentation I needed to substantiate my business equipment deductions. Saved me a ton of stress and potentially thousands in disallowed deductions. Just something to keep in your back pocket if you ever need to actually talk to someone at the IRS about your business deductions.
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Ali Anderson
•How does this even work? The IRS phone system is completely broken, so I don't understand how any service could get you through when millions of people can't get through on their own.
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Zadie Patel
•Sounds like BS to me. They probably just keep auto-dialing and charge you for it. The IRS phone system is designed to be impossible - that's how they avoid actually helping taxpayers. I'll believe it when I see it.
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Sean Matthews
•It uses a technology that navigates the IRS phone tree and holds your place in line. When it's about to connect with an agent, you get a call letting you know it's your turn. Basically it does the waiting for you, which is why it works. No, it's definitely not just auto-dialing. It's a patented system that works with how the IRS queue functions. I was skeptical too but when I actually got through to a helpful agent after weeks of trying on my own, I was sold. The documentation I got from that call saved my deductions, so for me it was worth it.
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Zadie Patel
I need to eat my words from my previous comment. After struggling for literally a month trying to reach the IRS about an S-Corp issue similar to the phone deduction question here, I broke down and tried Claimyr. Within 40 minutes I was actually talking to a real person at the IRS. I explained my situation with equipment purchases and mixed-use deductions, and they clarified exactly what documentation I needed to keep. The agent even sent me to a specialized department that handles S-Corp questions. For what it's worth, the agent confirmed what others are saying here - 100% deduction on the phone purchase is fine if it's primarily for business use, but the monthly service should only be deducted based on actual business use percentage. She suggested keeping a log for a representative time period (like 3 months) to establish that percentage.
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A Man D Mortal
I think there's some confusion in this thread. When you purchase a cell phone for your S-Corp, you have two options: expense it immediately using de minimis safe harbor (if your business has an accounting policy in place) OR depreciate it over 5 years. The Section 179 election is typically used for larger purchases, though technically you can use it for a phone. For a phone, the easiest path is usually the de minimis safe harbor for small purchases, which allows businesses to deduct items under $2,500 per item immediately rather than capitalizing them. Many accounting policies set this threshold at $1,000 or even $500. For the usage split, the IRS definitely expects you to only deduct the business portion of your cell service. 70% sounds reasonable if you can substantiate it.
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Declan Ramirez
•So if I bought an iPhone for $1,400 last month for my business, I can just deduct the whole thing this year under this safe harbor thing? My business is an LLC taxed as sole prop if that matters. Do I need to have some kind of written policy?
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A Man D Mortal
•Yes, you can likely deduct the full $1,400 iPhone in the current year using the de minimis safe harbor, assuming it's primarily for business use. For an LLC taxed as a sole proprietorship, you would deduct this on your Schedule C. You should have a written accounting policy in place that specifies your threshold for expensing versus capitalizing assets. The policy doesn't need to be complex - just a document stating that your business elects to expense any items under a certain dollar amount (like $2,500) in accordance with the de minimis safe harbor provisions. Keep this with your tax records.
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Emma Morales
Does anyone know if this 100% deduction also applies to phone accessories? I just spent like $300 on a super rugged case, screen protector, car mount and extra charging cables for my business phone. Can I write all that stuff off too?
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Katherine Hunter
•Yes, you can deduct accessories that are part of the business use of your phone. Since they're directly related to the business phone, they follow the same rules. If your phone is 100% deductible as a business expense (either through Section 179 or de minimis safe harbor), then the accessories that go with it would also be 100% deductible. Just make sure you keep the receipts and document that these accessories are for your business phone.
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Emma Morales
•Thanks for the clarification! That makes my annual tax planning much easier. My current case is falling apart after just 6 months of job site visits, so that rugged case is definitely a business necessity.
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Callum Savage
This is really helpful information! I'm in a similar situation with my S-Corp and was wondering about the phone deduction. One thing I'm curious about - how do you all track your business vs personal usage percentage? I feel like estimating 70% business use is reasonable for my situation, but I'm worried about justifying that number if the IRS ever asks. Do you keep detailed logs, or is it more of a reasonable estimate based on your work patterns? My phone is definitely essential for client calls, emails, and coordinating with vendors, but I also use it for personal stuff in the evenings and weekends. Also, does the same logic apply to tablets? I'm thinking about getting an iPad for presenting to clients and managing project documents on job sites.
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Keisha Williams
•Great questions! For tracking business vs personal usage, I'd recommend keeping a detailed log for at least one representative month to establish your baseline percentage. Track things like business calls, emails, app usage for work, GPS for client visits, etc. vs personal activities. Once you have that documented pattern, you can reasonably apply that percentage going forward. The IRS likes to see that you had a reasonable method for determining the business use percentage, not just a guess. Some people use phone apps that can help track this automatically, or you could manually log it in a simple spreadsheet. For the iPad question - absolutely the same logic applies! Tablets used primarily for business (client presentations, project management, etc.) can be deducted the same way as phones. Just make sure you can document the business use and keep good records of the purchase and how you use it for work. The key is having documentation that shows your business use percentage is reasonable and based on actual usage patterns, not just pulled out of thin air. That 70% estimate sounds very reasonable for someone actively using their phone for client communication and business operations!
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Kevin Bell
I've been dealing with this exact situation for my marketing consultancy S-Corp. My accountant gave me similar advice - 100% deduction on the phone purchase since it's primarily business use, but only the business percentage on monthly service. One thing that helped me was actually documenting my business use for a full quarter to establish a defensible percentage. I tracked business calls, client emails, work-related apps, GPS usage for client meetings, etc. Ended up with about 75% business use, which felt much more solid than just estimating. For record keeping, I created a simple one-page memo explaining why the phone is necessary for my business operations (client calls, email access, scheduling, document reviews on the go, etc.) and kept all purchase receipts. The monthly bills I highlight the business percentage and keep a running total. The peace of mind from having proper documentation is worth the extra effort, especially with S-Corps where everything flows through to your personal return. Better to be over-prepared than scrambling if you ever get questioned on it.
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