A VoIP service belongs on Line 25, utilities.
Why line 25
A hosted phone service bought for the business is telephone service, so it goes in utilities on line 25 even though it is delivered over the internet and billed like software. A business number on RingCentral, Grasshopper, Dialpad or Google Voice is deductible in full when the number exists for the business. The first-line rule that catches home landlines does not reach it: a VoIP number is an additional line, not the basic local service into your residence. Where a plan bundles phone service with meeting and messaging tools, keep the whole subscription on one line rather than splitting a small bill between two.
Stop looking up lines one at a time. ClaryBook totals your year into an IRS Schedule C worksheet in form order, Part I and Part II line by line, so a VoIP service lands on Line 25 without you sorting it.
Start for freeWhat a VoIP service is confused with
- Line 18, office expense
- Phone service, including a hosted number, is a utility on line 25; a subscription that is really collaboration or video meeting software rather than a phone line is office expense on line 18.
- Line 13, depreciation and section 179 expense deduction
- The service is line 25; desk phones, headsets and a network switch bought to run it are equipment, expensed under the de minimis safe harbor or depreciated on line 13.
- Line 27a, other expenses
- If you already itemise telephone in Part V on line 27a, keep VoIP there with it rather than splitting one phone cost across two lines.
Examples that belong on line 25
- $29.99 a month for a RingCentral business number
- $12 a month for a Google Voice business line
- $168 a year for a Grasshopper number for a one-person firm
- $60 a month for a four-seat Dialpad plan
- $22 a month for a dedicated VoIP line at a shop counter
What does not belong here
- Handsets and headsets, which are equipment.
- A personal VoIP number used for family calls.
- The same subscription claimed in both utilities and office expense.
- Internet access itself, which is its own line 25 entry.
What to keep
Keep the monthly invoices from the provider, which show the plan and the number of seats. If the number is published for the business, note that, because it is what makes a hosted line clearly a business line.
Other expenses on line 25
| Expense | Line |
|---|---|
| a dedicated second business landline | Schedule C, Line 25 |
| a hotspot or mobile data plan | Schedule C, Line 25 |
| a mixed-use phone bill | Schedule C, Line 25 |
| a mobile phone bill | Schedule C, Line 25 |
| a security monitoring service | Schedule C, Line 25 |
| a shared internet connection | Schedule C, Line 25 |
| electricity for a rented office or studio | Schedule C, Line 25 |
| gas and heating for business premises | Schedule C, Line 25 |
| internet service | Schedule C, Line 25 |
| utilities in a part-shop part-home building | Schedule C, Line 25 |
| water, sewer and trash for business premises | Schedule C, Line 25 |
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Sources
This page explains how Schedule C lines work. It is general information, not tax advice for your situation. If an expense is large or the answer turns on a fact about your business, confirm it with your tax preparer.
Looking for a different expense? The full Schedule C line lookup has every line from 8 to 27 with the expenses that belong on each, and Schedule C expense categories walks the whole form in order.
Stop looking up lines one at a time. ClaryBook totals your year into an IRS Schedule C worksheet in form order, Part I and Part II line by line, so a VoIP service lands on Line 25 without you sorting it.
Start for free