Internet Tax Deduction for Self-Employed Workers
In short: The business-use portion of your internet service is a deductible expense for 1099 taxpayers, recorded on Schedule C, Line 25 or 27a, based on IRS Pub 535.
How the Internet Deduction Works
When you are self-employed, any ordinary and necessary expense required to run your enterprise can generally lower your taxable income. Internet service falls squarely into this category if you use it to communicate with clients, manage an online storefront, or research industry trends. Per IRS Pub 535, you must separate your personal browsing from your commercial activity. You cannot deduct your total monthly household bill if family members also use the same network for streaming or personal entertainment. Instead, you isolate the exact business-use percentage and claim only that specific monetary amount on your tax return.
Calculating Your Business-Use Percentage
To determine your deductible share, evaluate how many hours you spend online for work versus personal tasks each month. For instance, if you routinely log forty hours of client work weekly alongside personal household usage, you establish a reasonable ratio to apply against your total internet bill. Alternatively, if your internet connection services a dedicated home office space, you may allocate the expense directly through your office calculations. Consistency is key when establishing this metric. Whatever formula you select, apply it uniformly across the entire calendar year and ensure your math remains logical and defensible.
Where to Report Internet Expenses on Schedule C
Once you calculate your total annual business internet expenditure, you must report it correctly on your federal tax paperwork. Self-employed filers typically place this amount on Schedule C, Line 25 under utilities, or alternatively on Line 27a for other miscellaneous business expenses. If you bundle your internet service with television or phone packages, you must painstakingly strip out the non-business components before entering your final total. Proofly helps you scan and categorize these bills throughout the year so you have clean totals ready when filling out your Schedule C.
Recordkeeping Requirements for Internet Bills
The IRS requires adequate records to support every write-off claimed on your tax return. For your internet deduction, retain monthly provider statements showing the total cost paid, alongside a brief written log explaining how you calculated your business-use percentage. Digital receipt scanners make storing these monthly PDF bills effortless. Keeping clean documentation safeguards your filing position if the IRS ever requests verification. Remember that quarterly estimated tax payments are due on April 15, June 15, September 15, and January 15, meaning accurate expense tracking benefits your cash flow year-round.
Related
What the Proofly receipt scanner does — and doesn’t
Does
- Reads merchant, date, line items, tax and payment method from a photo, with a confidence meter so you can correct it before saving
- Keeps personal and per-company receipts separate
- Maps business expenses to Schedule C lines (meals already at 50%)
- Exports an audit pack: every receipt image plus a ledger, as PDF, and CSV for QuickBooks or Xero
- Has a manual mileage log priced at the IRS rate for each trip’s date
Doesn’t
- File your taxes or give tax advice
- Sync live with QuickBooks or Xero (it’s CSV export)
- Pull transactions from your bank automatically
- Track your drives by GPS
- Guarantee how an audit turns out
Frequently asked questions
Can I deduct 100% of my home internet bill?
You can only deduct 100% if the internet connection is used exclusively for business and you maintain a separate personal internet connection elsewhere. Most people must split the cost between personal and business use.
Which line on Schedule C is used for internet expenses?
Internet expenses are typically reported on Schedule C, Line 25 (Utilities) or Line 27a (Other expenses).
What kind of records do I need to keep for my internet deduction?
Keep your monthly internet service provider bills and a written record explaining how you calculated your business-use percentage.
Does my internet deduction change if I claim the home office deduction?
If internet service is integrated into your home office space, it can be allocated as part of your overall home office expense calculations rather than standalone utilities.
Sources
This guide summarizes IRS guidance as of October 28, 2026 for planning purposes. It isn’t tax advice — confirm your situation with IRS.gov or a qualified tax professional.