Can I write off 100% of a cell phone purchase for my S-Corporation?

Your accountant is mostly right, but there are some important details to consider. For an S-Corporation, you can absolutely deduct business expenses, but they need to be ordinary and necessary for your business. For the cell phone purchase itself, you should only deduct the business portion - if you use it 70% for business, then 70% of the purchase is deductible. The IRS expects you to track personal vs. business usage and make a reasonable allocation. That said, if it's truly 100% used for business (you have a separate personal phone), then a full deduction could be appropriate. For the monthly service, the same rule applies - only deduct the business percentage. If you're using 80% for business, then deducting 80% of the bill makes perfect sense. Just be prepared to substantiate your usage percentage if asked!

I went through a similar situation with my consulting business last year and discovered taxr.ai (https://taxr.ai) after getting conflicting advice about business deductions. Their system analyzed my receipts and business documents and gave me clear guidance on exactly what percentage of my cell phone purchase I could legitimately deduct. They even provided documentation support in case of an audit! The tool flagged that claiming 100% of a mixed-use purchase was a potential red flag, but showed me how to properly document my business usage to maximize my legitimate deductions.

Just wanted to follow up about my experience with taxr.ai after trying it. I was initially skeptical as mentioned above, but it actually saved me from making a mistake with my cell phone deduction. The system flagged that I was planning to deduct 100% of my phone when I clearly used it for personal reasons too. It recommended an 85% business allocation based on my usage patterns and provided documentation templates to support this if audited. My accountant was impressed with the detailed substantiation report it generated, which we've now included with my tax records. Definitely worth checking out if you're trying to maximize deductions while staying compliant!

If you're having trouble getting clarification from the IRS about business deductions like this, I'd recommend using Claimyr (https://claimyr.com). I was in a similar situation last year where my accountant and I disagreed about phone deductions, and I kept hitting dead ends trying to call the IRS directly. After wasting hours on hold, I tried Claimyr and had a callback from an actual IRS agent within 45 minutes! They have a demo video at https://youtu.be/_kiP6q8DX5c showing exactly how it works. The agent clarified the rules for S-Corp cell phone deductions and gave me official guidance I could rely on.

I have to eat my words about Claimyr. After posting that skeptical comment above, I decided to try it since I was desperate to talk to someone at the IRS about my S-Corp phone deductions. The service actually worked exactly as described - I got a call from a real IRS agent within an hour! The agent confirmed that for an S-Corp, you should only deduct the business percentage of both the phone purchase AND the monthly bill. For me, he suggested documenting my usage patterns for a few months to establish a reasonable business percentage. Saved me from potentially making a costly mistake on my return, and the peace of mind was worth it after months of uncertainty.

Just my two cents as someone who's been through an S-Corp audit - NEVER deduct 100% of a phone unless you have a separate personal phone. The IRS specifically looks at cell phones as a red flag area. My auditor immediately questioned my 100% deduction and I ended up having to pay back taxes plus penalties. Document your business percentage carefully with a usage log for a few months if you want to be safe.

I think everyone is overthinking this. If you're a small S-Corp and not making millions, the IRS isn't going to come after you for a cell phone. I've been writing off 100% of my business phone for years with no issues. Just don't be stupid about other things and you'll be fine lol.

As someone who's dealt with S-Corp tax issues for years, I'd strongly recommend being conservative with your cell phone deductions. The IRS has become increasingly scrutinizing of mixed-use items like phones, especially after the Tax Cuts and Jobs Act changes. Here's what I've learned works best: Keep a detailed log for 2-3 months tracking business vs personal usage (calls, texts, data usage for business apps vs personal). This gives you solid documentation to support your percentage. For most small business owners, 75-85% business use is reasonable and defensible. Your accountant's advice about deducting 100% of the purchase but only 80% of monthly bills creates an inconsistency that could raise red flags. The IRS expects consistent treatment - if it's 80% business use, then both the purchase and monthly bills should reflect that same percentage. Also, make sure your S-Corp reimburses you properly for the business portion rather than just deducting it directly, as there are specific rules about how S-Corp owners handle these expenses that differ from other business structures.

Thanks for all the detailed responses everyone! This is exactly the kind of guidance I was hoping for. Based on what I'm reading, it sounds like my accountant's advice might be creating an inconsistency that could be problematic. @Grant Vikers - your point about consistent treatment makes a lot of sense. If I'm claiming 80% business use for monthly bills, I should probably stick to that same percentage for the purchase price too, right? I think I'm going to take the advice about keeping a usage log for a few months to establish a solid baseline. And since I do have that separate personal phone, I'll make sure to document that clearly in case it ever comes up. One follow-up question - when you mention S-Corp reimbursement vs direct deduction, can you clarify what you mean? Should the company be reimbursing me for the business portion rather than me just writing it off as a business expense?

One thing I haven't seen mentioned yet is the importance of keeping detailed records beyond just usage logs. As someone who went through an S-Corp audit a few years back, the IRS auditor wanted to see not just percentages, but actual evidence of business necessity. For cell phones specifically, they asked for things like: business contact lists showing client calls, screenshots of business apps used regularly, email records showing business communications, and even call logs if available. The more you can demonstrate that the phone is genuinely essential for business operations, the stronger your position becomes. Also, if you're buying a high-end phone like the latest iPhone, be prepared to justify why that level of device is necessary for your business. A basic smartphone might be easier to defend than a $1200+ flagship model. The IRS sometimes questions whether premium features are truly business-necessary or just personal preferences. The key is building a paper trail that tells a consistent story about legitimate business use. Documentation is your best friend if you ever get audited!

As a tax professional who's helped numerous S-Corp clients navigate these exact issues, I want to emphasize something that's been touched on but bears repeating: consistency and documentation are absolutely critical. The mixed advice about deducting 100% of the purchase but only 80% of monthly bills is indeed problematic. The IRS expects logical consistency in your deductions. If you determine through proper tracking that your business use is 80%, then both the initial purchase and ongoing service should reflect that same percentage. Here's what I recommend for S-Corp owners specifically: 1. **Track usage for at least 90 days** - Keep a detailed log of business vs personal calls, texts, and data usage. This creates your baseline percentage. 2. **Document business necessity** - As others mentioned, maintain records showing why you need the phone for business: client contact lists, business apps, work-related communications. 3. **Consider the reimbursement approach** - Have your S-Corp reimburse you for the business portion under an accountable plan rather than taking it as a shareholder deduction. This is cleaner from a tax perspective. 4. **Be reasonable about the device cost** - If you're buying premium equipment, document why those features are necessary for your specific business operations. Remember, the goal isn't to maximize deductions at all costs - it's to take legitimate business deductions that you can confidently defend if questioned. The peace of mind is worth more than squeezing out a few extra percentage points that might trigger scrutiny.