Earlier this year, we talked about how cell phone taxes were becoming a large portion of the cell phone bill. Although the IRS has not changed that aspect of the bill, they have made some changes in your favor.
The Internal Revenue Service issued a statement this week explaining that employer-provided cell phones are not taxable benefits.
The memo comes as a provision to the Small Business Jobs Act of 2010, enacted last fall, which removed cell phones from the definition of listed property, a category under tax law that normally requires additional recordkeeping by taxpayers.
The notice provides that when an employer provides an employee with a cell phone primarily for non-compensatory business reasons, the business and personal use of the cell phone is generally nontaxable to the employee. The IRS will not require recordkeeping of business use in order to receive this tax-free treatment.
Many have praised the move as the IRS made a leap into the mobile world as cell phones have become more a way of life as opposed to a fringe benefit.
Does your company provide you with a cell phone? Does your company offer to pay a portion of your cell phone bill?
If you have questions on what is taxable and what is not, make sure you schedule some time with us at Liberty Tax®. We would love to help you.
Disclaimer: Every effort has been taken to provide the most accurate and honest analysis of the tax information provided in this blog. Please use your discretion before making any decisions based on the information provided. This blog is not intended to be a substitute for seeking professional tax advice based on your individual needs.