November 06, 2019
Four Tips To Help Businesses Keep Effective Mobile Use Records Before Tax Time
The tax landscape in the business sector frequently changes in North America, and many companies are completely oblivious to the announced changes and the impact of these changes. Changes may be prompted in part because governments at all levels (including municipalities and counties and federal governments) are struggling with massive budget deficits and debts. As an example of important tax regulations, in the United States and in Canada, businesses need to be aware of the tax code as it pertains to the tax treatment and deductibility of a cellphone, from corporate taxes in the U.S. and from the employee taxable benefit perspective in Canada.
The IRS in the U.S. is taking a slightly different approach from Canada in that it is focusing on companies rather than individuals and emphasizes that the company must be tax compliant. This could result in a more efficient tax collection process. In general, you can deduct only the business portion of any business expense, including business use of your home or car and anything else you may use for business. Therefore, it’s helpful to require employees to maintain a “mileage book” for the car and cellphone, as well as details about your wireless subscription plan, so that you can present it to the IRS. To remain compliant with the IRS’s cellphone policy, you should document business and personal usage for every call, text message and packet of data. A company can’t deduct 100% of the cellphone from corporate taxes. Only the documented and substantiated business portion of the cellphone may be deducted.