Income Tax Service For Small Businesses – Employers may deduct, as a nontaxable fringe benefit, the cost of cell phones provided or reimbursed to employees for non-compensatory business reasons, such as the employer’s need to always contact the employee for work-related emergencies. Providing a cell phone to reward an employee or promote good will is not a non-compensatory reason. (Notice 2011-72)
Self-employed taxpayers may deduct the cost of business-use cell phones. If the taxpayer has no other telephone, costs must be allocated between business and personal use.
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