How to calculate it
Same approach as cell phones: estimate your business-use percentage reasonably.
If you work from home full-time and your household also uses the internet for streaming and personal use, a 50-70% business deduction is typical and defensible.
If you have a dedicated business internet line (like at a separate office or co-working space), that's 100% deductible.
What about the home office deduction?
If you use the regular method for your home office deduction, internet is already included in your home expenses calculation. Don't double-dip.
If you use the simplified method ($5/sq ft), you can deduct internet separately as a business expense on top of the simplified deduction.
Internet bill: $80/month ($960/year). Business use: 60%.
Deduction: $960 × 60% = $576
Using the simplified home office method? You get this $576 plus your $1,500 simplified deduction.
Internet costs are a utility expense. If deducted separately from the home office deduction, report on Schedule C, Line 25 (Utilities) or Line 27a (Other expenses).
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