How Do I Report Income from Employee Cell Phone or Internet Usage on a W-2 Form?

Employers generally do not report income from employee cell phone or internet usage on a W-2 form. Independent contractors often claim more tax deductions than traditional W-2 workers. W-2 employees who work from home do not have tax-deductible internet bills. Your employees may ask under these circumstances about reimbursement opportunities, like a work-from-home stipend.

Did you provide employees with cell phones for business use? Categorize your employees who use their phone for business and personal usage as having a non-taxable fringe benefit. Using a business cell phone on rare occasions for personal use may be an excludable de minimis fringe benefit. The IRS often considers accounting for these benefits as impractical given their smaller value. Employees who do not fit into these categories should see their income reported with the rest of their annual income on a W-2 form.

We handle Form W-2 generation and multiple 1099 forms with our W-2/1099 Forms Filer and a Software Generated Forms add-on module. Download our free 1099-etc Demo software now to see how the programs integrate and eliminate your need to buy pre-printed forms.

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