Talking telephone taxes

One hundred sixty-one years ago today, Alexander Graham Bell was born in Edinburgh, Scotland. Given how his most famous invention dominates almost everyone’s lives nowadays, I wanted to take a few minutes to pay homage to Bell.

If he’s watching from the great beyond, I suspect he’s amazed at how far his communications device has come.

So Bell’s birthday is the perfect occasion to talk about some of the tax breaks your phone(s) can provide.

Business calls only, please: Of course, these are all for business use. There’s no write-off for personal calls. Given the proliferation of cell phones, you can imagine how much deeper in debt the Treasury would go if there was such a personal tax break.

Do you have a home office? Even if you don’t take that particular deduction, if you installed a separate phone line for your work, be sure to count those monthly charges as a business expense.

If you don’t have a second phone line dedicated to your work calls, you still might be able to claim some calling costs. For example, any long-distance charges for business call made on your main, personal phone line are allowable business deductions.

What about your cell phone? As a self-employed taxpayer, you probably use your mobile phone to conduct business on the go. But the tax jury is still out on claiming all of your AT&T, Alltel, Verizon, Sprint or other wireless company charges as business expenses.

Some aggressive tax advisers say if you use the phone for work, then claim it. However, the IRS knows that most of us also use our cell phones for personal calls and texting. And it’s not as easy to prove exclusive business use for a cell phone.

Your best bet to support this claim might be to get the cellular account in your business’ name rather than as a personal account.

Employee expenses possible: If you’re an employee and use a cell phone to do your job, you might be able to write off depreciation on the device as an unreimbursed employee business expense.

In this case, the phone must be required as a condition of your job and you must have it for the convenience of your employer. Read more on these requirements on page 3 of IRS Publication 529.

Remember, though. This expense is part of the overall miscellaneous deduction. You have to itemize to claim it and then your total miscellaneous expenses must be more than 2 percent of your adjusted gross income before you can deduct them.

LD excise tax refund: Remember last year’s one-time refund of the long-distance excise tax? If you forgot to claim it, or in the last few months have rounded up all your old phone bills and they added up to much more than the standard claim amount you took, you still have a chance to get the money.

You can’t claim it on your current 2007 return, but you can get your phone cash, or more of it if you have the documentation, by filing an amended 2006 tax return, 1040X.

And if you didn’t claim the refund because you didn’t have to file a return last year, you still can file the special short form, Form 1040EZ-T, to request the refund.

More on the excise tax refund can be found at this IRS Web page and in this story from Bankrate’s 2007 Tax Guide.

Stop calling! While I’m proud to share the same name as the inventor of the telephone, I must admit that what’s usually a convenience has been quite an annoyance of late.

In fact, I am boycotting my phone until the polls close here in Texas tomorrow night. We’ve been getting multiple calls per hour from candidates (or, more precisely, their recorded voices) begging for votes. So everything right now is going straight to voice mail.

Now I’ve just got to find out who invented the phone answering machine and celebrate his or her birthday, too!