Cell phone usage no longer a taxable benefit

Good news.  The IRS has issued guidance on the tax treatment of cell phones.

You probably recall, CPAs and other tax advisers have been grumping at you to report as a taxable benefit the personal usage of cell phones. Yes, I know it’s ridiculous, but that’s the way the law was written.

Congress removed them from the definition of listed property.  The IRS has now explained that personal use of a cell phone provided by the employer for business reasons is nontaxable.  If the employer reimburses an employee for a personal cell phone but requires the employee to take business related calls on the cell phone, then the reimbursement is not taxable.

That is good news.  In one non-technical sentence, personal use of a ministry provided or reimbursed cell phone is not taxable.

For more details, see a great summary from ECFA:  IRS Provides Guidance on Tax Treatment of Employer-Provided Cell Phones.

If you want a technical explanation, ECFA points to a superb explanation from attorney Chip Watkins.  Check out his memo.

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