The phone company's categories

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Subject Author Date The phone company's categories Grip 07-28-2009  Re: The phone company's categories Arthur Kamlet 07-28-2009  Re: The phone company's categories Seth 07-29-2009  Re: The phone company's categories Alan 07-28-2009  Re: The phone company's categories Diogenes 07-29-2009  Re: The phone company's categories Drew Edmundson 07-29-2009  Re: The phone company's categories HLunsford 07-29-2009  Re: The phone company's categories Gene E. Utterback, EA, RF... 07-29-2009
Posted by Grip on July 28, 2009, 7:05 pm Please log in for more thread options I'm looking to reduce costs for my business. I have 9 phone lines all through the Business Department of the phone company which all go to one of two commercial locations. Each of the two locations has a "primary" number, the rest of the lines are for calling out, or calls rolling over, or faxing. Using residential lines for 7 of those 9 would save me a decent amount of money each month. I asked the phone company rep why I should use a business line instead of residential lines and he said I wouldn't get a business listing (unnecessary for those lines), and I wouldn't be able to deduct the costs as a business expense. That last bit doesn't seem accurate to me. Does the IRS (and state tax authorities) care how phone lines are categorized by the phone company? -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Arthur Kamlet on July 28, 2009, 7:16 pm Please log in for more thread options >I'm looking to reduce costs for my business. I have 9 phone lines all >through the Business Department of the phone company which all go to >one of two commercial locations. > >Each of the two locations has a "primary" number, the rest of the >lines are for calling out, or calls rolling over, or faxing. Using >residential lines for 7 of those 9 would save me a decent amount of >money each month. > >I asked the phone company rep why I should use a business line instead >of residential lines and he said I wouldn't get a business listing >(unnecessary for those lines), and I wouldn't be able to deduct the >costs as a business expense. > >That last bit doesn't seem accurate to me. > >Does the IRS (and state tax authorities) care how phone lines are >categorized by the phone company? My favorite answer: It depends! The IRS still has an archaic rule that a business phone has to be a second phone line, and if you do not have a second phone line, only the Toll Calls for        the business are allowed. But this does not seem to apply to you. And in many cases, Toll Calls are an antique and archaic term. If you have something that looks and feels like a hobby business the IRS would look to all the small stuff to sort out if this is a business for profit or a hobby business. If so, small things like a business phone for this business weigs in on the side of it being a business for profit. -- ArtKamlet at a o l dot c o m Columbus OH K2PZH -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Seth on July 29, 2009, 1:27 pm Please log in for more thread options >>Does the IRS (and state tax authorities) care how phone lines are >>categorized by the phone company? No, they don't. >My favorite answer: It depends! On what? >The IRS still has an archaic rule that a business phone has to be a >second phone line, and if you do not have a second phone line, >only the Toll Calls for        the business are allowed. That has nothing to do with how the phone company characterizes the lines. It does make sense that the IRS considers a residence to have a residential line, so if the taxpayer attempts to claim that all lines are business, one will not be deductible. Seth -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Alan on July 28, 2009, 8:16 pm Please log in for more thread options Grip wrote: > I'm looking to reduce costs for my business. I have 9 phone lines all > through the Business Department of the phone company which all go to > one of two commercial locations. > > Each of the two locations has a "primary" number, the rest of the > lines are for calling out, or calls rolling over, or faxing. Using > residential lines for 7 of those 9 would save me a decent amount of > money each month. > > I asked the phone company rep why I should use a business line instead > of residential lines and he said I wouldn't get a business listing > (unnecessary for those lines), and I wouldn't be able to deduct the > costs as a business expense. > > That last bit doesn't seem accurate to me. > > Does the IRS (and state tax authorities) care how phone lines are > categorized by the phone company? > The direct answer to your question is: No, the IRS does not care how the communication company categorizes your phone lines. The IRS cares that you do not deduct the cost of telephone services that are not used for business. If you use your residential line (the line at your residence) for personal and business purposes, the IRS will not allow you to deduct the cost of the basic line for local service. You can't deduct the cost of the line as the IRS assumes that any residential line is first and foremost for personal use. This basically leaves you with only deducting those business calls that are toll calls for which you are charged directly and any additional service that is used for your business for which you are charged on that first line. Any additional lines you have that are used for business are deductible. You appear to be discussing lines installed at your business location, not your home. If you use those lines for business, then they are deductible regardless of how the provider categorizes them. However, all of the tariffs I have seen, have pricing for residential lines installed at one's residence and pricing for business lines that are not installed at one's home. I would be very surprised if a communications provider would provide you residential lines (residential rates) at a location that was not a residence. They would be in violation of the tariff. -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Diogenes on July 29, 2009, 10:23 am Please log in for more thread options > I would be very surprised if a communications provider would > provide you residential lines (residential rates) at a location that was > not a residence. They would be in violation of the tariff. >> --- Sometimes people have businesses in houses that look like residences and have a residental-rate telephone listed as if it were for an individual rather than a business. The rule, by the IRS, has nothing to do with the classification by the telephone company. The limiting factor is that if you have a business in your home, then the BASIC line charge for ONE phone is considered a non-deductible personal expense. Extra costs for other lines or extensions or any feature other than the basic line charge are deductible if these costs are incurred for business reasons. -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Similar Threads Posted Phone Tax Refund February 5, 2007, 1:50 am Federal Phone tax refund December 30, 2006, 2:48 pm How claim phone tax credit? January 30, 2007, 11:31 am Phone/internet expense deducibility question December 20, 2006, 1:26 am Daytime phone number on 1040 required? January 4, 2008, 5:35 pm deducting charitable cell phone bills? 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