I saved this from a screenwriter's forum that no longer exists, since phone conversations can be hard to write. Part of the issue is whether you see and hear only one end of the conversation, see only one end but hear both sides, or see and hear both sides.
There are multiple ways to write a telephone conversation, because there are multiple ways they can appear on screen.
Seeing and Hearing One Person
If you have a one-sided phone conversation, ellipses (...) are acceptable, as is putting (pause) between the lines:
How are you? ... Yeah, I'm great, but the dog died ...
Sure, that'd be nice ...
OR
How are you?
(pause)
Yeah, I'm great, but the dog died.
(pause)
Sure, that'd be nice.
Seeing One Person and Hearing Both (voiceover vs. off-screen).
INT. SHOP TALK WRITERS - DAY
Dave sits at the bar. Phone pressed to his ear.
DAVE
Hi, Sarah. Just read your telephone dialogue advice.
SARAH (V.O.) *
And?
DAVE
Technically you should use (V.O.) to indicate telephone dialogue unless the significant other is genuinely just off camera, which would then kind of make the use of a telephone pretty much redundant.
SARAH
So I don't use (O.S.) then? Even though the other person is technically off screen?
DAVE
Although (O.S.) lets us know they are off screen, it reflects that they are still in the scene. Most telephone conversations are between people that are in separate scenes.
BAR GIRL (O.S.)
Here's your whiskey, Mr. Dave.
Dave looks up into the enchanting eyes of a bar goddess. She smiles a smile that melts every boy's heart.
DAVE
(into phone)
Look, Sarah, sorry, something's come up. Can I call you later?
* It’s also acceptable to use (FILTERED) instead of (V.O.), to indicate a voice the audience hears filtered through the telephone.
Seeing and Hearing Both People
When both people having the telephone conversation will be shown, cutting back and forth between the two, it’s called intercutting. With intercut you list each slugline separately first, then you state that the two scenes are intercut as necessary. This leaves flexibility to the director to decide how to do it. Of course, the director can also choose not to intercut it and only show one side of the conversation.
You would use this in a phone conversation only if it is important to the story or for clarity to show the reactions of both characters. You could also use intercut for a climax-type scene where one character is in trouble and another is racing to the rescue. There are some different ways to format this, depending on the writer, but the important thing is to make it clear in as little space as needed.
Use this method
INT. SUZANNE's KITCHEN - NIGHT
Suzanne paces nervously, then punches numbers on her phone.
INT. DARIN'S CAR - SAME
Darin drives through the rain, looking depressed. His cell phone rings.
INTERCUT - TELEPHONE CONVERSATION
SUZANNE
Come back.
DARIN
What? Now?
Stick with the term INTERCUT if you want to show two characters in two locations. It is probably the easiest way to go about writing a telephone conversation in this style.
The writer can also show a phone conversation by splitting the screen between the callers. Since this can apply to non-phone scenes, look for it at Format: Split Screen.
When the situation calls for a character to be having a phone conversation and talking with someone who’s in the same room, do it this way.
JOE
(on phone)
Yes, I said I'll be there!
(to customer)
Please, I'll just be a minute.
(on phone)
Look, if I say I'll be there, I'll be there!
(to customer)
I'm really sorry about this.
Maryn, who can take credit only for listening to people who know their stuff