Phone Bills: Home Office Utility Expense?

Whether a phone bill is considered a utility bill depends on who you ask. While the Internal Revenue Service (IRS) does not consider phone services as utilities for taxpayers looking to claim these items as a deduction, many individuals consider a phone—especially a landline—to be as important as other utilities. Bills for internet, cable, and cell phone services are also typically considered utilities.

Phone bills are considered a utility by most individuals

Today, many people consider phone bills, whether for landlines or cell phones, to be a utility. This is especially true for those who work from home or run a home-based business, as phones are essential for communication and connectivity.

Additionally, with the rise of remote work and online learning, internet access has become a necessity for many. As a result, internet bills are also commonly viewed as a utility, even though they are not always considered essential services by utility companies or the government.

Utility bills typically include basic information such as the customer's name, address, and account number, usage details, and payment information. These bills can be used as proof of residence and help individuals track their usage habits to identify areas where they can improve efficiency.

While opinions may vary on whether phone bills are utilities, most people consider them essential in today's digital age, where staying connected and accessible is crucial for various aspects of daily life.

Cable TV is still considered a utility by millions of Americans

The definition of a "utility" is a business that provides an everyday necessity to the public at large. Cable TV is often grouped together with the internet when discussing utilities, and the internet is widely considered a utility due to its essential role in daily life.

In a 2021 survey by Pew Research Center, 69% of respondents who did not use cable or satellite services cited the cost of these services as being too high, while 71% said they could access the content they wanted online. This suggests that for many, the internet has become a substitute for cable TV as a utility. However, this also indicates that there are still millions of Americans who consider cable TV a necessity, as 39% of non-subscribers have never cancelled their cable or satellite subscription.

Additionally, cable TV can be considered a utility when bundled with other services. Many cable TV providers also offer internet services, and when these are packaged together, they can be seen as a joint utility.

While the courts have stated that cable TV is not a utility, this does not reflect the views of all Americans, and for some, it remains an essential service.

Phone bills are not a utility for tax deduction purposes

Whether or not phone bills are considered a utility depends on who you ask. While some people consider a phone bill to be a utility, others disagree. However, for tax deduction purposes, phone bills are not considered a utility.

A utility bill is a monthly statement of the amount a household owes for any of the basic services that are essential to running a household. These services generally keep a home operable and comfortable. Examples of utilities include electricity, water, and gas. Depending on how you define utilities, you could also add sewage, trash, and recycling, or even TV, internet, phone, and streaming services to that list.

Phone bills are not considered a utility for tax deduction purposes. This means that you cannot include your phone bill as a utility deduction on your tax return. However, that does not mean that you cannot deduct your phone bill at all on your taxes. If you use your phone for business purposes, you may be able to deduct a portion of your phone bill from your taxes.

If you use your phone for both personal and business purposes, you can only deduct the business-use percentage of your phone bill. This means that you will need to calculate the percentage of time that you use your phone for business purposes and then multiply that percentage by the amount of your monthly phone bill. This will give you the amount that you can deduct from your taxes.

It is important to note that if you buy a separate mobile phone and cell phone plan for business use only, that would be 100% tax-deductible. Additionally, if you incur additional charges on your personal phone for business purposes, such as long-distance calls or roaming charges, these charges may also be deductible.

To claim a deduction for your phone bill, you will need to provide adequate documentation to support your claim. This documentation may include a log of your calls, indicating whether each call was personal or business, and the business purpose of each call. You will also need to show that your cell phone is not your primary residential phone.

Phone bills are not reported to credit bureaus

Whether or not a phone bill is considered a utility depends on who you ask. Some people consider a phone bill a utility, especially with more people working from home and relying on their phones for internet access. However, phone bills are generally not reported to credit bureaus unless they become seriously delinquent and are sent to collections. This can have a serious negative effect on your credit score.

Your credit score is based on how you've handled loans and credit cards, but paying your utilities and phone bills on time can also be a factor. Payment history is the single most important factor in your credit score. If you keep up with your utility and phone bills, and that activity is reported to credit bureaus, it could help boost your credit. Late, missed, or delinquent payments can negatively impact credit scores and creditworthiness.

If your phone and utility bill payments aren't reported to the credit bureaus, you can consider using a third-party service to report your payments. However, these services may charge a fee and may not report to all three major credit bureaus: Equifax, Experian, and TransUnion. Additionally, FICO, the company behind the most widely used credit scoring models, offers a score called the FICO XD 2 that takes into account certain non-traditional data, such as utility payments. Experian also offers a similar program called Experian Boost. These programs can be useful for consumers who don't have enough data in their records or are trying to build a solid credit score by showing they pay their bills on time.

It's important to note that even if your phone and utility bill payments aren't directly impacting your credit, it's still a good idea to pay all your bills on time. This is a key part of financial responsibility, and it can help you avoid late fees or penalties and loss of service. Additionally, if you fall too far behind on payments, your account could be turned over to a collections agency, which would then be reported to the credit bureaus and negatively impact your credit score.

Phone bills can be bundled with other services

Bundling can be a convenient way to receive multiple services through a single provider, resulting in potential cost savings. However, it can also lead to confusion over billing. For instance, charges from multiple companies for local and long-distance services may appear on a single bill, making it important to scrutinize the bill for accuracy.

Additionally, some carriers charge a fee for the convenience of receiving one consolidated bill, which is not mandated by the government. This fee is typically avoidable by choosing to receive separate bills from different carriers.

It is worth noting that opinions vary on whether phone bills, specifically cell phone bills, are considered utility bills. While some individuals consider a cell phone as important as a landline, others do not.

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