Lands on Schedule C, lines 18, 22, 25 — Office expense, supplies, utilities

If your only phone and internet are provided by an employer, this article is not for you. It is about bills that arrive in your own name.

Almost every mixed cost in a self-employed return works the same way: figure the business share, deduct that. Car, home, phone — split it and move on.

There is one that does not, and it is the one people claim most confidently.

The short answer

The cost What you get
Base rate, first line into your home Nothing. Not a percentage
Business long distance on that line Deductible
A second line used only for business All of it
Mobile plan Business share
Home internet Business share, deducted separately
Supplies bought but not used Not yet

The sentence that disallows it outright

From the Schedule C instructions, line 25:

"If you used your home phone for business, do not deduct the base rate (including taxes) of the first phone line into your residence. But you can deduct any additional costs you incurred for business that are more than the base rate of the first phone line."

Publication 587 says the same thing in its own words, and calls it what it is:

"The basic local telephone service charge, including taxes, for the first telephone landline into your home is a nondeductible personal expense."

Note what is missing: any percentage. This is not "deduct the business share of the first line". It is nothing. A home office that is otherwise perfectly deductible does not rescue it.

The logic is that a household has a phone line whether or not anyone works from home, so the first one is the cost of living there, not of working there.

Where people go wrongTreating the phone bill like the electricity bill. The utilities reach your return through the home office percentage. The first phone line is carved out by name and reaches it through nothing at all.

What the same rule gives back

The identical sentence, read forwards, hands you three deductions:

"charges for business long-distance phone calls on that line, as well as the cost of a second line into your home used exclusively for business, are deductible business expenses."

Business long distance on the first line — deductible, even though the line's base rate is not.

A second line used only for business — deductible in full, base rate included. The disallowance attaches to the first line, not to telephony.

And your mobile. The rule is written about the first telephone line into your residence. A cell plan is not that line, so it goes back to being an ordinary mixed expense: deduct the business share.

Four bills, four answers

The bill Annual Treatment Deduction
Landline base rate $420 First line — disallowed $0
Mobile plan, 70% business $1,140 Business share $798
Home internet, 40% business $960 Business share, separate $384
Second line, business only $336 Exclusive business use $336

The landline is the only one with a special rule, and it is the only one most people try to claim.

The percentage has to come from somewhere

"Business share" is where these deductions are won or lost, and a round number chosen in April is the weakest possible basis.

One month of call and data records, taken at a representative point in the year and kept with the return, is a defensible method. Seventy percent because it feels about right is not — it is the same failure as a mileage log reconstructed from memory, and it fails for the same reason: the number exists, but nothing behind it does.

Supplies are not deductible when you buy them

While you are on these lines, one more rule that catches people doing the right thing for the wrong year. Line 22:

"In most cases, you can deduct the cost of materials and supplies only to the extent you actually consumed and used them in your business during the tax year."

A December order of a year's printer paper, toner and packaging is not a December deduction. It is a deduction as it is used — the same principle that governs inventory for a seller, applied to the things the work consumes rather than the things you resell.

Buying before year end to lower the bill is one of the most common pieces of bad advice in self-employment, and this line is where it stops being true.

Which line does what

  • Line 18, office expense — "your expenses for office supplies and postage."
  • Line 22, supplies — the materials the work itself consumes.
  • Line 25, utilities — "Deduct utility expenses only for your trade or business." Household utilities do not belong here; they reach the return through the home office percentage.

Which of 18 or 22 a cost lands on matters far less than it landing on exactly one of them. The deduction is the same size either way; counted twice, it is a problem.

Write the percentage down in the month you can prove it. That is the whole job.

Common questions

Can I deduct part of my home phone bill?
Not the base rate of the first line. The Schedule C instructions: "If you used your home phone for business, do not deduct the base rate (including taxes) of the first phone line into your residence. But you can deduct any additional costs you incurred for business that are more than the base rate of the first phone line."
Not even a percentage of it?
No, and this is what makes the rule unusual. Almost every other mixed expense is split by business use. This one is disallowed outright. Publication 587 calls it "a nondeductible personal expense."
What about a second line used only for business?
Fully deductible. Publication 587: "charges for business long-distance phone calls on that line, as well as the cost of a second line into your home used exclusively for business, are deductible business expenses."
Does the first-line rule kill my cell phone deduction?
No. The rule is written about the first telephone line into your residence. A mobile plan is not that line, so it falls back to the ordinary treatment of a mixed expense: deduct the business share and keep something that shows how you arrived at it.
How do I work out the business percentage?
The same way as any mixed cost — on the facts, and written down when you know them rather than reconstructed in April. A month of call and data records is a far better basis than a round number chosen a year later.
Is home internet part of my home office deduction?
It is deducted separately rather than folded into the home office percentage. Publication 587 says telephone expenses should not be included as a cost of using your home for business but deducted separately on the appropriate form, and internet is treated as its own mixed expense on the same logic.
I bought a year of printer paper in December. Can I deduct it all?
In most cases no. Schedule C line 22: "In most cases, you can deduct the cost of materials and supplies only to the extent you actually consumed and used them in your business during the tax year." Buying is not consuming.
What is the difference between line 18 and line 22?
Line 18 is office expense — "your expenses for office supplies and postage." Line 22 is supplies, meaning the materials the work itself consumes. The distinction matters less than making sure a cost lands on exactly one of them.
What about utilities generally?
Line 25 is blunt: "Deduct utility expenses only for your trade or business." Household utilities reach your return through the home office percentage, not through line 25.

This article is for educational purposes only and does not constitute tax, legal, or financial advice. Consult a qualified tax professional about your situation.

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