The Tax Deductibility of Cable Internet Phone Expenses

If a single phone line (whether land, cable, or cell) is being used for both business and personal calls, historically the IRS has wanted to see a record of every phone call (not possible with cable Internet providers), or an appropriate breakdown of how much of the phone expense is personal and how much is business.

My accountant confirmed that if you're turned an old landline phone number in your home into your home office telephone, and added it to your Internet cable service package, you can deduct the full amount of the Internet service provider's bill so long as you also have another telephone number (cell phone) that can be considered your personal phone.

If you use a cell phone for both personal and business purposes, to get a business deduction you'd need to calculate what percentage of the cost is related to business use of the phone. 

The following articles on the Web offer additional insight into the tax deductibility of different types of telephone services.

Deducting Telephone Expenses for Your Home Office

Are Internet, Cable & Phone Write-Offs for a Small Business?

Deductions for Cable/Internet/Phone Service

 

More About Wow! Services

Wow! is a great cable service provider, but they serve a limited territory only in some areas of Illinois, Michigan, Ohio, and Indiana. Visit their website to see if their service is available in your area. If so, you will find it costs less than that offered by Comcast.

The reason their territory is so small is because this is what used to be covered by Americast, which was a part of AT&T until that company was bought by Southwest Bell several years ago. At that time, private investors bought Americast and renamed it Wow!

I learned that it costs anywhere from $100 to $400 million to "wire" a new city, and this has to be done before Wow! can serve even one customer in a new area. Thus the company, though growing, is growing slowly, one city at a time. Iím grateful to be in an area they serve because they are saving me a bundle of cash.

A Note from Betsy in the Midwest:

"We have never used cable. Too expensive, and we don't have time to watch it, but for several years when our local telephone company would not come this far (only two blocks away) for high speed, we subscribed to the Internet through a cable company. Half the time it did not work, so now we have turned to MagicJack and use our phone with a "naked" standalone DSL medium high service for $29/month through our telephone company. Generally it works fine, plus we have all the perks, as if we had additional services on a land line. So, for $20/year, the cost of MagicJack and our DSL, we have the whole thing."

 

 

 

 

 

 

 

 

 

Copyright © 2000-2013
by Barbara Brabec
All Rights Reserved
Barbara Brabec's World
BarbaraBrabec.com

 

Do You Really Need a Landline Phone (and the Expense That Goes With It)?

How I cut my monthly telephone expenses
from $117 to just $25 by switching my
local and long-distance service from
AT&T to my cable Internet service provider

by Barbara Brabec

 

AS USUAL, it took me awhile to "get it," but one day I woke up and realized I no longer needed to be tethered to AT&T, but could get everything I needed in the way of long distance and local telephone service from my cable Internet supplier.

Until mid-September, 2011, I had two landline phones; the residential phone my husband and I had installed when we moved into our home in 1989; the other, a business line added in 2000 when I opened my website and needed a separate line for working on the Web. Through the years, it was a challenge to find the best long-distance rates for both lines, but things got better when AT&T began to offer affordable unlimited long-distance packages.

Do You Need a Separate
Business Line to be "Legal"?

Iíve always preached to my home business readers that the use of a residential telephone number for business purposes may be a violation of one's local telephone company's regulations. Years ago when I wrote Homemade Money, I learned that each state has a separate commission that determines the usage of a residential phone, so I cautioned my readers to check on this before putting a residential phone number on their business stationery, brochures, business cards, or website. I have no idea how local telephone companies are dealing with this issue now that there are so many different options for long-distance telephone service, but in the past, a telephone company might impose a fine for improper use of a residential number, tell the customer to stop using it for business purposes, or simply start charging them business rates if they discovered a customer violating the rules.

Long after I no longer needed two phone lines, I kept my business line because I wanted to operate legally. But rates that were once $50 inched up to $72/month over the years, and I finally decided this was just too much expense on top of my residential phone bill of $45/month when I was the only one using a phone. The turning point came the day I had some line trouble and spoke with the AT&T repairman about the legality of cancelling my business line and just using my home phone number on my website as a contact number.

He laughed and said that a separate business line used to be "the law," but now with so many people working at home and doing business on the Web, the telephone company has better things to do than worry about work-at-homers who use a cell phone or their residential number for both personal and business use. And putting a home phone number on a website that didnít sell products, he said, would really be insignificant to AT&T.

Actually, what AT&T and other landline telephone companies are worrying about now is the competition from cable Internet companies that are offering terrific bundled cable/Internet/phone service packages, plus services such as Magic Jack, Skype and other VoIP (voice over IP) services that use one's Internet connection and computer to make free phone calls through a USB port.

I have DirecTV for my cable TV service, but I have used Wow! as my Internet service provider for a long time. Until I spoke with a salesperson there, I had no idea that they could "import" whichever phone number I wanted them to use, and I could dump both of my AT&T landlines and get everything I needed and much more for just $12/month. Compare that to AT&Tís "unlimited long distance" service at $30 (after taxes and other fees were added) which only gave me the ability to call within the continental United States. And consider that I had to renew this service package every year and hope I could keep the rate Iíd had the year before. Then add $14/month for voice mail, and you can see why AT&T is losing a lot of business to cable companies and cell phone providers.

I was thrilled to learn that my new phone service would give me truly unlimited local and long distance calling not only in the continental United States, but also Alaska, Hawaii, Canada, Puerto Rico, Guam, Saipan, Northern Mariana Islands, and the U.S. Virgin Islands—PLUS free voice mail, various caller ID services, three-way calling, and more—all for just $12 (plus a number of state and federal taxes amounting to about $13, just like AT&T).

There is one drawback, however. When you get your long distance service through an cable Internet provider, your telephone calls are not itemized. That means there is no way to know who you called, or when you made a call unless you keep a record of the numbers called. So if you're going to use a cable service provider for your business long-distance needs, you may want to keep a record of calls made to business contacts (which won't be easy to remember to do).

Landlines vs. Internet Cable Phone Services

When I realized that my phone calls would now be going out over the Internet, I remembered all the complaints I'd heard about the quality of phone services provided by Magic Jack, Skype, and other VoIP providers and wondered about the quality I'd get with my Internet cable provider. I learned that the main difference between the two is that cable companies are the primary provider of the service, whereas all the VoIP providers are using third-person providers, which naturally affects the quality of the calls and the reliability of the service as a whole.

Something I didnít know until I spoke with a salesperson at Wow! was that, technically, I own the telephone wires in my home, and that what my local telephone company was charging me for in the past was service on the line running from my house to the pole out there on the street somewhere that connects to their services. But now that line is connecting me to my cable company, and while calls are going out over the Internet, they are running through the existing telephone lines in my home instead of my computer.

At first I was concerned that by cutting both landline phones out of my life that I would suddenly find myself without a telephone in an emergency, having heard that a power failure would render me "phoneless." But I was assured that, in the event of a power failure, Wow! (and I assume other cable companies as well) has a backup power source that will be good for about four hours. Beyond that, yes, both the Internet cable and telephone service would be gone until the power was restored, but in that case my cell phone would probably still work because those signals come from a satellite. The problem here for many, however, is that they live in the wrong place. In large cities with skyscrapers, it may be hard to get a cell phone signal at times. And if you live out in the country, there may be no satellite signal for a cell phone, no cable company serving that area, and no high-speed Internet provider to work with. Folks in rural areas do have a couple of options, however, through HughesNet and Wild Blue Satellite Internet.

With two telephone accounts at AT&T, I had a choice of which number I wanted to use as my primary home and office number in the future, and I naturally took the residential number because it was wired to ring in every room of my home, unlike the business line which rang only in my office. When the cable company imported that number, it automatically closed my account at AT&T, so all I had to do was call to cancel the other account. AT&T discontinued service on both accounts on the same day they got notice. On request, they gave me four months of forwarding service for my old business number. All in all, a very smooth transition especially appreciated by one who hates change.

Do You Know Who Has Your Number
and Where It Is Appearing on the Web?

In making a list of all the places on the Web where I needed to change my telephone number, I was astonished to find that it was appearing in connection with my name on more than 3,000 web pages, from white pages, yellow pages, superpages, and allpages to countless other listings on various city and state sites that provide business telephone numbers and reverse number look-up sites. Of course NONE of these listings were authorized by me.

Never having searched for my telephone numbers before, I had no idea that my personal name, business name, website, and business telephone number was appearing on so many directory-listing sites. This is just an example of how robots crawl the Web and pick up information about us. Many of the listings for my name include a P.O. address I stopped using in 1989. Others show my home address (which I've never listed anywhere on the Web), and most of these listing link to a map to my front door, something I got off Google a long time ago, but which now seems to have been a waste of time.

Most annoying was that, years ago, someone connected my name to Loomis Publishing in Naperville, a company I have never had an association with. I tried repeatedly to get my name removed from the various listings that have tied my name to this company, but it can't easily be done. After a while, I decided it wasnít worth my time and trouble to keep trying to do this.

I have no idea what happens when a landline number is imported to a cable company service provider, but it will be interesting to check both numbers on the Web a year from now to see what telephone number the Web robots have picked up for my personal and business name.

If you'd like to comment on this topic, drop me an email, and I'll add your remarks to this article.

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