Posted by TJ on Saturday June 13, 2009 @ 10:19 PM
[Tags: accounting, taxes, business]

The government plans to start stringently enforcing a 1989 rule that classified employer-provided mobile phones as a taxable benefit if they employee uses the phone for personal use as well as business use.

The portion used for personal use should be included on your annual W-2 as taxable wages. The IRS requires employees to keep records distinguishing the personal and business portion of your bill. To make reporting easy the IRS would allow employee to adopt a simplified method which would tax employees on 25% of the monthly cell phone bill under their plan. So if your employer pays $1500/year for your cell phone you would be taxed on an additional $375 of income. Not much really on the individual level but the IRS expects this to generate millions of additional tax revenue.

source: IRS Notice 2009-46 [irs.gov]