Rob's Rants

And I mean that in a good way.

One of the most often overlooked tax rules, at least among technology workers, is that personal use of a work-provided cellphone is a taxable benefit and you’re supposed to pay the Gov’t if you do this. The problem is, almost everyone who has ever been issued a cellphone for work uses it for personal use and no one ever tracks it and pays the tax.

Although the IRS has recently (January 2010) indicated that they would hold off on enforcing their position outlined above, instead waiting for Congress to pass legislation clarifying the issue (see this FierceWireless article), waiting for Congress to actually do something could take the better part of a lifetime. So, whether or not you think the benefit should be taxable, it is. That’s the way the law is written. It essentially says that personal use of a work-provided cellphone is a taxable “fringe benefit,” and just like the use of a company car, it should be tracked and reported. But the paperwork to account of all the simple 30 second personal calls one makes is so ridiculously burdensome that no one does it.

And this is where I think Google Voice can help. Simply put, you can avoid using your work cellphone for personal calls if people call a Google Voice number that also reaches your desk phone. Or, if your work plan can designate some free numbers (Inner Circle, MyFaves, etc.), and your Google Voice number was one of them, then you could probably show that you weren’t consuming any chargeable minutes taking personal calls and will owe nothing. As the Wall Street Journal says in the article linked above, one of the IRS’ suggested rules says:

The IRS, in a notice issued this week, said employees could avoid tax liability if they showed proof they used personal cellphones for nonbusiness calls during work hours. The agency also could decide on a set number of phone minutes as “minimal personal use” that would be untaxed.

I would hope that showing that you used your own personal GV number would also count, if you could show that the company paid nothing for those minutes.

Anyway, I think it’s important that I point out the following warning. In big red letters.

I am not an accountant. I haven’t consulted with an accountant to write this. I may have no idea what I’m talking about. I could just be a babbling idiot. This is just an idea, not advice.

Or, as the Refreshments say in the song Nada:

There ain’t no moral to this story at all.
Anything I tell you very well could be a lie.
I’ve been away from the living, I don’t need to be forgiven,
I’m just waiting for that cold black soul of mine,
To come alive.

Good luck with your taxes.