Business Tips

Claiming Internet as a Business Expense

Can I Claim Internet as a Business Expense?

Don’t wait until Tax Day to start thinking about business deductions. From running a small business, preparing to launch a new venture, or operating your business for a few years, the Internal Revenue Service offers a host of tax deductions to Internet-powered companies.

Optimum Business knows that every line item counts in ensuring your business is as successful as possible. That’s why we’re here to help determine if you can claim Internet access as a business expense. Read on for the latest IRS deductions around Internet costs, and remember to always consult a certified professional accountant for the most up-to-date IRS rules around deductions and expenditures. 

Business person on a laptop

What Is a Write-Off?

A tax write-off is a legitimate expense that can be claimed as a deduction or a credit and lower your taxable income. A tax write-off is sometimes called a tax deduction.

How to Claim Internet as a Business Expense

The IRS updates federal tax rates, allowances, and thresholds every year by adjusting them for inflation, so it’s important to make sure you (or your accountant) check the codes and regulations for the current laws.

In order to meet the standard for deductions, the IRS requires that deductions are usual, necessary, customary, and reasonable expenses for your type of work. Said another way, someone who doesn’t regularly use the Internet for their job, like a farmer, wouldn’t qualify in the same way as an online clothing retailer would. 

You can claim your Internet deductible on your tax forms. These forms will differ if you’re self-employed or a business owner. 

Internet access that supports services for the business—and is not mandatory for operation—is considered an office expense. Otherwise, your Internet access is classified as a utility. 

Who Can Deduct Internet Access?

Internet for work is deductible on your taxes. However, it’s important to remember that your Internet expenses are only deductible if you use them specifically for work purposes. 

How Much Can You Deduct?

The amount you can deduct on your taxes depends on a number of factors, like whether your Internet is meant for your work-from-home setup or for your office. Or if your Internet is used solely for business purposes or also for miscellaneous personal use. 

It is best to consult an accountant if you’re unsure how much of your Internet bill you can deduct. 

If you, like most people, use the Internet for a mix of business and personal needs, you’ll be able to expense the percentage of your Internet costs that were related to business matters. 

Keeping organized records to support the deduction claim you’re trying to make is very important, so try and carve out time each month to keep your paperwork up to date.

Now that you know more about tax deductions for Internet services, are you getting everything you need from your Internet provider? Reach out to Optimum Business today to learn more about our Internet packages. We’re standing by to help you get connected and protected with high-speed Internet for your business that has security built-in from the start. 

Optimum does not offer tax advice. Business owners should check with an accountant for any tax related questions.