Can I Deduct My Internet Bill for My Home Office?

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If you work from home, you’re probably wondering whether your internet bill is tax deductible. The good news is that if you use your internet for business purposes, you may be able to deduct a portion of your monthly internet costs. However, the IRS has specific rules about how much you can deduct and who qualifies.

Who Can Deduct Internet Expenses?

Self-employed individuals, freelancers, and small business owners who work from home can typically deduct their internet expenses as a business expense. If you’re a W-2 employee working remotely, the rules changed after 2017—you can no longer deduct unreimbursed employee expenses, including internet costs, on your federal tax return.

The key requirement is that you must use your internet connection for legitimate business purposes. This could include client communications, research, online meetings, managing your business website, or any other work-related activities.

How Much of Your Internet Bill Can You Deduct?

You can only deduct the portion of your internet bill that’s used exclusively for business. If you use the same internet connection for both business and personal use (which most people do), you’ll need to calculate the business-use percentage.

For example, if you use your internet 60% for business and 40% for personal activities, you can deduct 60% of your monthly internet bill. To determine this percentage, track your internet usage over a representative period, noting how much time is spent on business versus personal activities.

If your monthly internet bill is $80 and you use it 60% for business, your deductible amount would be $48 per month, or $576 per year.

What Internet Expenses Are Deductible?

Deductible internet expenses include:

∙ Monthly internet service fees

∙ Installation or setup fees (if used for business)

∙ Equipment rental fees from your internet provider

∙ Costs for upgrading to faster internet speeds needed for business purposes

You cannot deduct the cost of a personal computer, laptop, or mobile device separately through your internet deduction—these have different deduction rules.

How to Claim Your Internet Deduction

Self-employed individuals report internet expenses on Schedule C (Form 1040) under “Utilities” or “Office Expenses.” If you’re claiming a home office deduction using the simplified method, your internet costs may already be included in that calculation.

Keep detailed records of:

∙ Monthly internet bills and payment receipts

∙ Documentation of your business use percentage calculation

∙ Any correspondence with your internet provider about business services

What If You Have a Dedicated Business Internet Connection?

If you maintain a separate internet connection used exclusively for business, you can deduct 100% of that cost. This is common for businesses that require high bandwidth, specific security protocols, or guaranteed uptime for business operations.

Having a dedicated business line also simplifies record-keeping and makes your deduction easier to justify if questioned by the IRS.

Common Mistakes to Avoid

Don’t claim 100% of your internet bill if you also use it for personal activities like streaming, social media, or online shopping. The IRS expects reasonable business-use percentages, and claiming an unrealistic amount could trigger an audit.

Also, remember that if you’re reimbursed by your employer for internet expenses, you cannot also deduct those costs on your tax return—that would be double-dipping.

Bottom Line

If you’re self-employed and work from home, your internet bill is likely partially deductible based on your business use percentage. Keep accurate records, calculate your business use honestly, and claim this legitimate deduction to reduce your taxable income. For specific advice on your situation, consult with a qualified tax professional.