First landline rule
Section 262 explicitly disallows a deduction for the basic local telephone service of the first telephone line to your residence. A second business line, mobile phone, internet, and long-distance charges on the first line are all deductible to the extent of business use.
Cell phone allocation
Cell phones used for both business and personal calls require a reasonable allocation. A common safe approach is to log usage for a representative two-week period and apply the resulting percentage for the year. Alternatively, switch to a dedicated business line and deduct 100%.
Internet allocation
For most home offices, internet is the primary cost driver of remote work. Reasonable allocations range from 50% to 80% based on the size of the office, the number of devices, and the nature of the work. Document your allocation methodology in your tax records — a contemporaneous note is much stronger than a reconstructed estimate during audit.
Equipment
A modem, router, headset, or webcam used in the business is deductible (or depreciable if expensive enough to require capitalization). Most equipment under the de minimis safe harbor ($2,500 per item or invoice without an applicable financial statement) can be expensed immediately.
Business-use percentage on the line
Schedule C line 25 ("Utilities") commonly captures the business-use portion of internet and phone. Some prefer line 27 ("Other expenses") with a labeled detail. Either is acceptable as long as it is supported by records.
Where this fits in the larger Schedule C picture
Schedule C has more than two dozen named expense lines plus an "Other expenses" catch-all. For most small businesses, four or five lines drive the bulk of the deduction total — vehicle, home office, depreciation, contract labor or wages, and supplies — and the remaining lines individually contribute small amounts that nevertheless add up. Treating each named line as a recurring decision rather than an afterthought, and revisiting the categories each January, often surfaces $2,000–$5,000 in additional legitimate deductions that a less disciplined process would have missed entirely.
Documentation that survives an exam
An IRS examination of this deduction will request three things: proof of payment (bank or card statement), proof of the underlying transaction (invoice or receipt), and proof of business purpose (a contemporaneous note or calendar entry). The first two are usually trivial to produce; the third is where most filers fall short. Capturing business purpose at the moment of the expense — a one-line note in your bookkeeping software or a category and memo on the receipt-capture app — converts a generic charge into a documented deduction that will withstand scrutiny three to six years later when memory has faded.