Home Office, Phone, and Internet: How to Track It Cleanly (Without Guessing at Tax Time)
If you work from home, there’s a good chance you’ve said some version of this:
“I pay for my phone and internet anyway… can I write it off?”
or
“I have a home office… but I don’t really track it.”
Totally normal. Also, this is where things get messy fast.
Because the goal isn’t just “get deductions.” The goal is clean, consistent tracking so you’re not:
guessing,
digging through statements in April,
or accidentally claiming something that won’t hold up if you’re ever asked about it.
So let’s make this simple and boring (boring is the dream).
The problem I see all the time
Most business owners do one of these:
Claim 100% of phone/internet even though they clearly use it personally too
Claim nothing because it feels confusing
Do the “round number method” (please don’t)
Pay personal and business expenses from the same account and promise themselves they’ll sort it out later
You don’t need perfection. You need a system you’ll actually follow.
Why it matters
When home office and mixed-use expenses are tracked poorly, it can cause:
missed deductions (you leave money on the table)
messy books (your reports become less trustworthy)
tax-time stress (because you’re reconstructing months of life)
higher risk if you’re ever asked to support what you claimed
Clean tracking also makes it easier to answer basic questions like:
“Can I afford to hire someone?”
“What did I actually spend on operations?”
“Why did my profit drop last month?”
What counts (in plain English)
Home office (big picture)
Home office deductions are generally tied to having a space that is used regularly and exclusively for business.
Translation: the home office typically needs to be a dedicated area for work, not the kitchen table that becomes homework central at 4:00.
There are a couple different methods to calculate it, and your best option depends on your situation. But regardless of method, the tracking foundation is the same: document the space and track the costs consistently.
Phone and internet (mixed-use)
Phone and internet are usually mixed-use for most people. The clean approach is:
track the full bill
document a reasonable business-use percentage
apply that consistently
The messy approach is: “I think I used it for business a lot.”
Your future self will hate that method.
The clean tracking system (3 steps)
Step 1: Pick your method
Choose one of these and stick with it:
Option A: Separate accounts (cleanest)
Business phone line (or separate business cell plan)
Business-only internet, if you truly have it (rare)
Business bank/credit card for business expenses
If you can do this, it becomes very simple.
Option B: Mixed-use with a percentage (most common)
You keep your personal plan, but track the business portion consistently.
This is what most people do, and it’s completely workable.
Step 2: Set your business-use percentage (and write down why)
Examples of reasonable documentation:
“Phone is used for client calls, scheduling, and business email daily. I estimate 70% business use.”
“Internet is used for business software, video calls, and file transfers during work hours. I estimate 60% business use.”
This is not about gaming the system. It’s about having a consistent, defendable method.
If you’re unsure where to start, start conservative and adjust later.
Step 3: Track it the same way every month
Here are two simple approaches:
Approach 1: Monthly entry (easy)
Each month, you record:
the full bill amount
the business portion (based on your %)
the remainder stays personal (and should not live in business expenses)
Approach 2: Pay from business, reimburse personal portion (especially useful for S-corps)
If your business pays the full bill but part is personal, you need a consistent reimbursement or allocation method so your books stay accurate.
This is where structure matters. If you’re an S-corp, talk to your tax pro about the cleanest way to handle reimbursements (it’s worth doing right).
Common mistakes (that create the most trouble)
Here’s what I’d avoid:
Claiming 100% of phone/internet with no rationale
Changing your percentage constantly depending on the year
Running personal charges through the business and “hoping it nets out”
Not keeping any record of your home office setup (a quick photo and note goes a long way)
Tracking this once per year instead of monthly
The goal is calm, repeatable, boring.
Mini example (what this looks like in real life)
Let’s say your internet bill is $120/month and your phone bill is $90/month.
You decide:
Internet is 60% business use
Phone is 70% business use
Each month, your business portion would be:
Internet: $120 × 60% = $72
Phone: $90 × 70% = $63
So you consistently track $135/month as business expense, and you can actually explain how you got there.
No scrambling. No guessing. No weird year-end “math vibes.”
Quick checklist (save this)
Pick: separate account OR mixed-use percentage
Write down your percentage and why
Track monthly (not annually)
Keep a basic record of your home office setup
Keep business books clean by separating personal spending
If you want help setting this up cleanly in your bookkeeping system (and making sure it fits your business type), I can help.
Book a consult here: https://calendly.com/sara-dunhambookkeepingservices
Secure upload link (if you want me to review statements/setup): https://www.cognitoforms.com/DunhamBookkeepingServices/SecureDocumentUpload
(This post is for general education and not individualized tax advice. Rules and best practices can vary by business type and situation.)
