What Are Considered Utilities For Tax Purposes?

Gas, water, sewer, electricity, and heat are examples of utilities. Because these are deductions for commercial use of the residence, they will be reported on Form 8829.

What are some instances of expenses related to utilities?

  • Electricity/gas (This includes lights and other electrical demands in addition to heating and cooling)

If you’re moving into a new place, you might ask a landlord, apartment manager, or realtor about the average cost of utilities in the area.

If you’re renting, your landlord or manager may be able to provide you with information on utility bills from other tenants or link you with someone who already lives there. A realtor should be able to supply you with copies of the current homeowner’s utility bills if you’re buying a house.

Collect utility bills for a specific time period. If your utility expenses fluctuate seasonally, you should investigate them for at least a year. Include costs for expenses such as electricity, gas, water, heating oil, phone, and Internet access, which are all considered utilities. Other services, such as trash removal, may be offered by some firms.

Is it true that the telephone and the internet are considered utilities?

Utilities are the essential services that maintain your home, apartment, or business comfortable and functional. Water, sewer, electric, gas, trash, and recycling are all common utilities. Cable TV, internet, security, and phone service are all examples of technology subscriptions that might be called utilities.

With one key exception: who pays the utility bills, home utilities are comparable to apartment utilities. Utilities may be divided between the renter and the landlord in an apartment. In a house, however, the homeowner is responsible for contracting and paying for the essential services.

Water and sewer

You are responsible for establishing water and sewage services with your city municipality when you purchase a home. You may pay a monthly flat price, a seasonal cost, a water budget-based rate, or another sort of rate, depending on where you reside.

Electric and gas

Although natural gas may not be required in your home, electricity is a must! Electricity prices vary by state, and we track them down to the cent every day at EnergyBot. Homeowners can save money on electricity and gas by installing high-quality insulation in their walls and utilizing energy-efficient equipment.

Trash and recycling

You’ll have to pay a monthly fee if you want the city to pick up your garbage and recyclables every week. Rates for curbside rubbish collection vary by area, and contracts for household waste collection are usually overseen by your local city government.


Contact your favorite service providers to connect your home to amenities such as cable TV, internet, and phone service. Because these aren’t required services, you can choose which provider and service level you want. Homeowners can save money on technology by purchasing a modem and router rather than renting them, and by opting for streaming services rather than cable.


Home security isn’t a must-have feature, but it can help you sleep better. Prepare to pay for installation and equipment up front, as well as a monthly monitoring cost, when choosing a security system.

Is a cell phone a necessity?

Is a telephone bill considered a utility bill? Phone bills are commonly classified as utility bills. However, this only applies to landlines, not mobile phones. Telephone companies’ invoices are utility bills, and they, like energy suppliers, provide a service to the general public.

Can you deduct a portion of your cell phone bill?

Cellphones have become as important to business as a land line, making them a genuine, tax-deductible business expense. However, because cellphones are intricately linked to our personal lives for most of us, the IRS scrutinizes this deduction closely to ensure that personal electronics aren’t claimed as a business expenditure.

Your cellphone as a small business deduction

You can claim the commercial usage of your phone as a tax deduction if you’re self-employed and use your mobile for business. You might properly deduct 30% of your phone cost if you spend 30% of your time on the phone on business. Writer Kristin Edelhauser of “Entrepreneur magazine” suggests acquiring an itemized phone bill so you may track your company and personal usage and justify your deduction to the IRS. You might also get a second phone number and use it solely for business purposes.

Deductions for employees

Even if you work for someone as an employee, you may be required to use your personal smartphone for business purposes for tax years prior to 2018. If you itemize your deductions, the IRS permits you to claim depreciation on your phone as a “unreimbursed business expense” if you use it for work on a regular basis and it’s a typical, accepted business practice.

Unreimbursed business expenses that total more than 2% of your adjusted gross income can be deducted. Professional association dues, legal costs, and other expenses indicated in IRS Publication 529 are included in this category.

These and other unreimbursed employee expenses are no longer deductible as of 2018.

Cellphone depreciation

According to Schneider Downs, the Small Business Jobs Act of 2010 affects the way you compute cellphone depreciation. If you used your cellphone for business less than 50% of the time, you could only depreciate it on a straight-line 10-year depreciation schedule under the prior regulations. However, the law now permits you to deduct depreciation (the decrease in value caused by wear and tear) over a seven-year period, as well as making bonus depreciation easier to claim.

Your cellphone as fringe benefit

If your company provides you with a cellphone as part of your job, your taxable income could increase. According to Schneider Downs, using your cellphone for personal calls even significantly counts as a fringe benefit that must be factored into your gross compensation.

If you can show that you use a personal cellphone during business hours and make all of your personal calls on it, the IRS may find that the business phone is used solely for business purposes, in which case your income will not be affected.

What are the four different sorts of utility?

People buy products and services in order to gain some benefit or happiness. When they ingest it, they are able to satisfy a need or desire. Economic utility is the term for this occurrence. Form utility, time utility, place utility, and possession utility are the four essential ideas that lie under this umbrella. Understanding and adjusting marketing and production efforts to the way people buy and consume items can help businesses increase sales and income.

Is it true that phone bills are considered utilities?

Electricity, gas, water/sewage, and waste disposal are all examples of utility costs. Other services, such as internet, cable TV, and phone service, are sometimes considered extra utilities, despite the fact that they are now regarded standard in most American homes.

What do you mean by utility bills?

Your utility bills reflect the most fundamental costs of owning and operating a home. Gas, electricity, and water are all included.

All of them are items that you simply cannot live without. From your lights to your TV, computer, WiFi connection, and any security system you may have in place, such as a burglar alarm, nearly everything in your home is powered. Gas heats your water and living areas, as well as powering your oven, guaranteeing that you can prepare your meals!

Utility bills are needed to keep track of how much of these essential services we use and how much we owe to our suppliers.

Utility bill meaning

Any utility bill’s aim is to collect money for the gas, electricity, and water you use.

Your utility bill details how much gas, electricity, and water you used during a specific time period and how much it cost you. It should show how many units you’ve used and how much each unit costs. It will also show you the overall cost of the services you’ve used.

Most utility rates are set for a set length of time, so you should have a good idea of what to expect from your statement.

Utility costs, such as gas and electricity, should be paid in regular monthly installments. Any underpayment or overpayment will be resolved with the supplier at the end of your contract.

Facts about utility bills

  • Water bills are typically charged quarterly, so you should expect four bills per year.
  • Although many organizations are now migrating to email-based invoices, paper utility bills are still issued to your address.
  • Going paperless with your bills can result in savings of up to 510 on your bill.
  • Each bill will list the acceptable payment methods as determined by your supplier.

What is the difference between utility, electricity, energy and gas bills?

Utility bills are a broad phrase that encompasses your usage and prices for power, gas, and water.

It can also include invoices for vital services such as sewer services provided by the council. Utility costs do not include optional services like cable television or cell phones.

Frequently, the terms utility, electricity, energy, and gas are used interchangeably. A utility bill, often known as an energy bill, typically includes electricity, gas, and, in some cases, water. A telephone bill is not considered a utility bill.

What other household bills do I need to worry about?

Other expenditures involved with maintaining a household may exist in addition to electricity, gas, and water bills. These could include the following:

  • Payments for rent or a mortgage
  • Connections to the internet and mobile phones
  • Cable TV contract, TV license
  • Payments by credit card

These bills do not fall under the category of utility bills. Other common household expenses, such as groceries, are not included.

How do utility bills impact my credit score?

Utility providers frequently share payment history with credit companies, thus how you pay your utility bills has an impact on your credit score (or “credit rating”).

What does this mean?

If you have a good track record of paying your payments on time, you will find it easier to get a loan or a contract (for example a mobile phone contract). If you skip a payment, it may indicate that you are more likely to default on a loan. That implies lenders may refuse to give you money or charge you a higher interest rate.

The credit history from the previous twelve months is usually the most essential. Wait until you’ve built up a stronger credit record if you’ve missed payments in the last twelve months. Lenders are sometimes willing to overlook prior flaws. If your current payments are on time, this should happen.

Setting up direct debits with your bank can help you avoid late payments. You might also use your calendar to establish a recurring reminder. Regular payments will ensure lenders that you are a reliable borrower.

What is considered a utility for PPP purposes?

Many small company owners have now received and spent their Paycheck Protection Program (PPP) loan awards for several months, and many are now ready to begin the forgiveness process.

However, since the Cares Act was approved, SBA rules and legislation have drastically changed the conditions of the program, and we predict further significant adjustments in the coming months.

To refresh your memory, here’s how the laws governing PPP loan forgiveness are now being interpreted:

  • The borrower now has 24 weeks to use the funds for eligible expenses in order to qualify for loan forgiveness once the funds are received. Loans that are due by June 5, 2020, can choose to preserve the original 8-week timeframe.
  • The funds must be spent on qualifying expenses within 24 weeks (or 8 weeks if you elect) of receiving the PPP funds (the “covered period”), but no later than December 31, 2020.
  • Payroll costs, rent, utilities, and interest on real and personal property mortgages are all eligible expenses. However, related party rent is now limited to the amount of mortgage interest paid that is due to the PPP borrower’s rented space.
  • To receive complete forgiveness, at least 60% of the PPP money must be spent for payroll costs. Otherwise, there is some wiggle room.
  • Wages (but not more than $100,000 prorated per employee, resulting in a cap of $15,385 for the 8-week period or $46,154 for the 24-week period), employer state and local payroll taxes (primarily state unemployment taxes for Michigan employers), health insurance premiums and other employee benefit programs, and employer retirement contributions are all included in payroll costs.

However, there are several restrictions that apply to business owners. Only C-corporation owners are permitted to include health insurance costs, and only C and S firms can include retirement contributions costs. These costs, however, are limited to the following quantities for 2019: For an 8-week Covered Period, the score is 8/52, and for a 24-week Covered Period, the score is 2.5/12.

See the chart below for monetary compensation restrictions for business owners:

  • Additional information on timing difficulties for acceptable payroll costs has been supplied through SBA guidance:
  • Payroll expenses incurred or paid during the year “Forgiveness is available during the covered period.
  • Starting on the day the PPP funds are received, the covered period is 24 weeks (or, if you choose, 8 weeks).
  • Period covered by alternative payroll ( “APCP) 24 weeks (or 8 weeks if you choose) beginning on the first day of the first payroll cycle in the covered period, but only for bi-weekly or more frequent payroll cycles.
  • Payroll costs are deemed paid on the day a paycheck is distributed or an ACH credit transaction is initiated by the borrower.
  • Payroll costs are incurred on the day when pay is received (i.e. the day worked). If you are not working, you will be charged according to the employer’s timetable (the day the employee would have worked).
  • The most recent pay period If paid on or before the following normal payment date, payroll costs incurred during the last pay period of the covered period, or the APCP, are eligible for forgiveness. Otherwise, only if paid during the covered period or the APCP, may it be forgiven.

7. Non-related party rent, utilities, and interest on real and personal property mortgages are eligible if they were in place on 2/5/20. Electricity, gas, water, telephone, internet connection, and transportation are examples of utilities.

  • Non-payroll costs are referred to as a group, and the amount forgiven cannot exceed 40% of the overall PPP forgiveness.
  • If you meet the following criteria, you may be eligible for forgiveness:
  • During the time period covered, or
  • Expensed within the covered period and paid on or before the next normal billing date, even if it is after the covered period. This may necessitate a bill proration.

8.If the average full-time employee counts during the covered period (or APCP) are lower than the “reference period,” the forgiven amount of qualifying PPP costs is lowered.

  • The reference period is the shorter of the following:
  • or from 2/15/19 to 6/30/19, whichever comes first.
  • 1/1/20 to 2/29/20, or 1/1/20 to 2/29/20, whichever comes first.
  • A 12-week period between 5/1/19 and 9/15/19 in the case of seasonal employers.
  • Full-time is defined as working 40 hours or more per week and is equal to one full-time equivalent (FTE).
  • Part-time employee hours can be computed as a percentage of their total paid hours or as a.5 FTE. However, the option must be applied to all part-time employees and for all time periods.
  • Any employees that were let go between 2/15/20 and 4/27/20, and who are rehired (or replaced) by 12/31/20 (at their prior wage amount and hours), will not be considered as a reduction to the FTE count.
  • If an employee is dismissed for cause, resigns freely, or wants a schedule reduction voluntarily, the person will be counted at the same FTE as before the occurrence.
  • Employees who are asked to be rehired and refuse can be excluded from the calculation if the rehire offer is for the same salary/wage and number of hours as before they were laid off, the offer is in writing, the offer is made in good faith, the employer’s offer and the employee’s rejection are documented, and the borrower notifies the state unemployment office of an employee’s rejection within 30 days.
  • Borrowers who are unable to find competent workers by December 31, 2020, or who are unable to return business operations to 2/15/20 levels due to COVID-19-related operational constraints are now eligible for an exemption (i.e. capacity limitations, etc.).

9.Any PPP funds used but not forgiven, as well as any unused PPP funds, will remain a PPP loan and be subject to the PPP loan repayment terms, which are now as follows: no payments until the SBA grants forgiveness or forgiveness is denied, 1% interest rate, and a 5-year repayment period for new borrowers and current borrowers if the lender agrees. If the borrower does not ask for forgiveness within 10 months of the 24-week covered period (or 12/31/20 if earlier), he will be required to start paying payments.