How the Phone Deduction Works
If you use your phone for recording lessons, replying to student questions, running ads for your course, or managing payment platforms like Stripe or Kajabi, the IRS considers that a legitimate business expense. But you can only deduct the portion of use tied to your business, not 100% of the bill, unless you have a separate phone used exclusively for work.
Most course creators use one phone for both personal texts and business tasks. In that case, you need to estimate a reasonable business-use percentage. A common approach is tracking usage for a typical month, then applying that percentage consistently. If your phone bill is 100 dollars a month and you determine 50% of your use is business related, you deduct 50 dollars a month, or 600 dollars for the year.
What You Can Deduct
The deduction covers more than just your monthly service plan. You can also write off:
- The cost of the phone itself, either as a full deduction under Section 179 in the year purchased or depreciated over time if it is used partly for personal reasons
- Phone cases, chargers, or accessories used primarily for content creation
- Apps or subscriptions purchased specifically for your business, like editing software or scheduling tools
If you buy a phone primarily to film course content or run a business Instagram account, and personal use is minor, you may be able to argue for a higher business-use percentage. Just be prepared to justify that number if the IRS asks.
Where This Goes on Your Tax Return
As a course creator operating as a sole proprietor or single-member LLC, phone expenses get reported on Schedule C, typically under "Other Expenses" or a similar line item. This flows into your overall net profit calculation, which also determines your self-employment tax owed on Schedule SE.
This matters more than it might seem. Every legitimate deduction reduces your taxable income, which lowers both your income tax and your 15.3% self-employment tax. Missing deductions like this throughout the year is a common reason creators get hit with a bigger tax bill than expected each April.
Keeping Records That Hold Up
The IRS does not require a minute-by-minute log, but you do need a reasonable method for calculating your business-use percentage. Options include:
- Reviewing a few months of call and data logs to estimate business versus personal use
- Keeping a simple written log for one representative month each year
- Saving screenshots of app usage broken down by category
Whatever method you choose, use it consistently and keep documentation in case of an audit. Also save your phone bills and any purchase receipts for the device itself.
Why This Matters for Real-Time Tax Planning
Small deductions like phone expenses add up over a year, but they're easy to lose track of if you're only looking at your books once a quarter or once a year. Course creators who wait until tax season to reconstruct their expenses often underestimate deductions, overestimate taxable income, and get surprised by a larger tax bill than their bank balance suggested. Tracking business expenses as they happen, including recurring costs like your phone bill, gives you a more accurate picture of your actual profit and estimated quarterly tax payments on Form 1040-ES throughout the year.