Can I deduct a new phone on my Schedule C for eBay reselling business?
I've been reselling on eBay for about 3 years now and I'm pretty comfortable with filing Schedule C for my taxes. My current phone is an iPhone SE 2nd gen, but I really need to upgrade since I use my phone constantly to scan barcodes when sourcing inventory, and I'm finding the small screen and slower processor are slowing me down. I'm looking at getting a new phone with a bigger screen and faster processor specifically to make my eBay business more efficient. My question is: can I deduct part of the cost of a new phone on my Schedule C? Since I use the phone for both business and personal use, I'm thinking I can only deduct a percentage of the cost. Maybe like 60% business use and 40% personal? I already take the home office deduction for my workspace. Also, I haven't been deducting my monthly phone bill because I figured the home office deduction covered that, but now I'm not sure if that's right. Any advice from other resellers or tax folks would be super helpful! I want to make sure I'm maximizing my deductions but obviously don't want to do anything sketchy.
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Miguel Ramos
Yes, you can absolutely deduct a portion of your new phone on your Schedule C! This is a legitimate business expense since you're using it directly for your eBay operations. The key is determining the business-use percentage, which should be based on your actual usage pattern. For the phone itself, you have two options: 1) Deduct the business-use percentage as a Section 179 expense in the year you buy it, or 2) Depreciate the business portion over several years. Most small business owners prefer the immediate Section 179 deduction. As for your phone bill, this is completely separate from your home office deduction. Your home office covers the space you work in, but not your communication expenses. You should absolutely be deducting the business percentage of your monthly phone bill on Schedule C as well. Just make sure you keep good records to support your business-use percentage in case of an audit. This could be a log of your phone usage or a reasonable estimate based on your business activities versus personal use.
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Zainab Ibrahim
•Thanks for the insight! How do you actually calculate or prove the business use percentage though? Like do I need to track every minute I use the phone or something? Also, if I buy a $1000 phone and claim 60% business use, would I deduct $600 all at once or spread it out?
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Miguel Ramos
•You don't need to track every minute of phone usage - that would be impractical. Instead, you can make a reasonable estimate based on your typical usage patterns. For example, if you primarily use your phone for business during weekdays and personal use on evenings/weekends, you might estimate 60-70% business use. Just be prepared to explain how you arrived at your percentage if asked. For a $1000 phone with 60% business use, you could deduct $600 all at once using Section 179 (immediate expensing) if that works better for your tax situation. Alternatively, you could depreciate it over 5 years, which would give you a smaller deduction each year. Most small resellers prefer taking the full $600 in the year of purchase.
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StarSailor
After struggling with similar tax questions for my small business, I discovered taxr.ai (https://taxr.ai) and it's been a game changer. I was constantly confused about what percentage of my phone and laptop I could deduct, plus all the other business expenses that are partly personal. The tool analyzed my situation and gave me a complete breakdown of how to maximize my legitimate deductions without crossing any lines. What I loved is that it showed me exactly what documentation I needed to keep for each type of deduction - especially for mixed-use items like phones. It also confirmed I was leaving money on the table by not deducting the business portion of my phone bill! Apparently that's completely separate from the home office deduction.
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Connor O'Brien
•Does it actually connect to your bank accounts or do you have to manually enter all your expenses? I tried another tax tool last year and it was such a headache that I ended up just guessing on a lot of stuff.
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Yara Sabbagh
•I'm always skeptical of these tax tools. How is this better than just asking an accountant? And does it actually give specific advice for eBay sellers and our unique situations like inventory, shipping supplies, etc?
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StarSailor
•It doesn't require connecting to your bank accounts, but it does have an option to upload statements if you want to. I personally just entered my major expenses and answered questions about my business activities, and it generated all the guidance from there. Much less tedious than the other tools I've tried. The advice is definitely tailored to your specific business type. When I selected "online reseller" it immediately focused on inventory tracking, shipping deductions, and mixed-use assets like phones and computers. It even covered things I hadn't thought about like partial deductions for internet service and mileage for post office runs and sourcing trips.
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Yara Sabbagh
I was really skeptical about taxr.ai when I first heard about it, but after struggling with my eBay business deductions last year and getting hit with an unexpected tax bill, I decided to give it a try. Honestly, it was eye-opening. It walked me through exactly how to calculate the business percentage for my new phone (turns out I was being WAY too conservative at only 10% - my actual business use is closer to 65%) and showed me that I should've been deducting my monthly phone bill all along. The documentation guidance alone was worth it - now I have a solid system for tracking my mixed business/personal expenses instead of the vague estimations I was doing before. Really wish I'd found this before last year's tax mess!
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Keisha Johnson
After reading all these comments about phone deductions, I wanted to share something else that might help. I had questions about this same issue last year and spent HOURS trying to get through to the IRS. After being on hold forever and getting disconnected twice, I found Claimyr (https://claimyr.com) and it was a lifesaver. They got me connected to an actual IRS agent in about 15 minutes when I had been trying for days on my own. The agent confirmed exactly how to handle my phone deduction and cleared up some other Schedule C questions I had. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c Honestly, getting direct confirmation from the IRS gave me so much peace of mind about my deductions, especially for mixed-use items like my phone.
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Paolo Rizzo
•Wait, how does this actually work? Is it like a special phone number or something? I tried calling the IRS last month and literally gave up after 2 hours on hold.
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QuantumQuest
•This sounds like BS honestly. Nobody can magically get through the IRS phone system. They're notoriously understaffed and overwhelmed. How could some random service possibly get you to the front of the line?
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Keisha Johnson
•It's not a special phone number - they use a system that automatically navigates the IRS phone tree and holds your place in line. When they reach an agent, you get a call connecting you directly. I was skeptical too until I tried it. I had exactly the same experience as you - spent hours on hold and gave up multiple times. With Claimyr, I put in my number, went about my day, and got a call when they had an agent on the line. The whole process took about 15 minutes instead of the hours I wasted trying on my own.
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QuantumQuest
I have to publicly eat my words about Claimyr. After posting that skeptical comment, I was still desperately trying to get IRS clarification about my home office and phone deductions before filing my taxes. Out of frustration, I decided to try the service, fully expecting it to be a waste of money. Shockingly, I got connected to an IRS agent in about 20 minutes. The agent walked me through exactly how to handle my phone deduction (60% business use in my case) and confirmed I should absolutely be deducting my phone bill separately from my home office. They even pointed out a couple other deductions I was missing for my eBay business. I've literally never been able to get through to the IRS before without multiple attempts and hours of waiting. Consider me converted.
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Amina Sy
Just wanted to add my experience as another eBay seller - I've been deducting 75% of my phone costs for years with no issues. I document my usage with a simple note in my calendar once a month estimating business vs personal use. For the actual phone purchase, I spread the deduction out through depreciation since I usually keep phones for 3+ years. Don't forget to also deduct a portion of your phone case, screen protector, and any accessories that help with your business (like a ring light for photos or external battery if you're scanning inventory for long periods).
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Oliver Fischer
•Do you keep seperate phones for business and personal? Seems like it would be cleaner for taxes but maybe overkill for a small operation?
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Amina Sy
•I don't keep separate phones, and honestly, I think that would be overkill for most small eBay sellers. Having two phones to manage would be a hassle, and the tax benefit isn't worth the inconvenience for me. What I do instead is maintain good documentation. At the beginning of each month, I estimate my business vs. personal usage percentage and note it in a spreadsheet. If my usage patterns change significantly, I adjust the percentage. This approach has worked fine for me through several years of filing Schedule C, and it's much simpler than juggling multiple devices.
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Natasha Petrova
I made a big mistake my first year reselling by not tracking any phone expenses! My accountant was like "um, you use your phone for taking ALL your listing photos and communicating with customers and you didn't deduct it??" 😂 Lesson learned! Now I track my usage with a simple app that logs how much time I spend in ebay/paypal/etc apps vs other apps. Super easy way to justify my percentage. Also don't forget if you buy a new phone every 2-3 years you can depreciate it instead of deducting all at once.
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Javier Morales
•what app do you use for tracking? that sounds super useful actually
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Natasha Petrova
•I use an app called Screen Time (it's actually built into iPhones) that shows how much time I spend in each app. I take screenshots at the end of each month and just calculate what percentage of my usage was in business apps (eBay, PayPal, my inventory app, etc.) versus personal apps. It's not perfect since sometimes I'm using social media for business networking or research, but it gives me a solid baseline that I can justify if needed. For me, it consistently shows about 65-70% business usage, which matches up with my general sense of how I use my phone.
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Aisha Abdullah
As someone who's been reselling on various platforms for about 2 years, I can definitely confirm that phone deductions are legit! I upgrade my phone every couple years specifically because I need good camera quality for listing photos and a fast processor for managing inventory apps. One thing I learned the hard way - make sure you're also deducting things like your phone case and any accessories that help with business. I have a tripod mount and ring light attachment that I use exclusively for taking product photos, and my accountant said those are 100% deductible as business equipment. Also, regarding your monthly phone bill question - you're absolutely right that it's separate from your home office deduction. I've been deducting about 70% of my monthly bill based on my usage patterns, and it adds up to a nice chunk of savings over the year. The key is just being consistent with whatever percentage you choose and having a reasonable way to back it up if asked. Good luck with the new phone - having better tools really does make the business more efficient!
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Evelyn Martinez
•This is really helpful advice! I hadn't thought about the accessories being deductible too. Do you track your phone usage percentage the same way every month, or do you adjust it based on seasonal changes in your business? I'm wondering if I should be more detailed about tracking since my eBay activity tends to ramp up a lot during Q4 with holiday sales.
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