1099 Tax Software Blog

Brokers use IRS Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, to report the proceeds from the sale, transfer or exchange of securities, including:

• Stocks and funds
• Bonds and other debt instruments
• Futures contracts
• Options
• Commodities
• Foreign currency contracts
• Fixed investment trusts
• Short sales
• Partnership shares

The broker must file a multi-part Form 1099-B for each customer who has sold securities for cash, who bartered property or services, or has received stock or cash because of foreign merger or acquisition.

You Just Might Be a Broker If….

The IRS considers you a broker if you are in the business of transacting sales of securities offered by others. You can be an individual, American or foreign, a governmental unit or a company. You’re also a broker if you issue and retire debt obligations or are a company that regularly redeems its own stock. However, you’re off the hook if you manage a farm for someone else, your company buys only odd-lot shares from its stockholders on an infrequent basis, or you’re an international corporation that redeems its own debt. You may not have to fill out Form 1099-B in connection with the sale of shares arising from incentive stock options that are exercised on the same day as the shares are sold.

You also fill out Form 1099-B if you are a barter exchange, which is a person — or an organization that has a set of members — who jointly trades or barters property/services. This doesn’t include the exchange of information for noncommercial purposes. You don’t have to file if you do less than 100 transactions a year, if you’re an exempt foreigner, or if the transactions have a fair market value under $1.

The third category of transactions that trigger the need to file Form 1099-B is when a customer receives property, cash or stock from a corporation that must recognize a gain because of a takeover by a foreign company. These types of transactions must also be reported on Form 8806. If proceeds are paid in a foreign currency, you must report the amount in U.S. dollars using the spot exchange rate on or around the date the money is received.

Other filing exceptions are granted for a variety of reasons, including:

• Sales by charities, IRAs, health savings accounts, federal and state governments, and C corporations
• Sales by dealers, custodians and trustees
• Sale at the issue price of shares of certain regulated investment companies
• Sale of certain types and amounts of precious metals (not metal contracts)
• Sales of foreign currencies (not currency contracts)
• Debt-related transactions involving payments on savings bonds, CDs, retirement of OID securities issued prior to 2014, and callable demand obligations redeemed at par and issued before 2014
• Fractional shares worth less than $20
• Spot and forward sale of certain agricultural commodities
• Sales for exempt foreign customers

Filling Out the Form

Form 1099-B had a face-lift in 2014 so that it coordinates with Form 8949, Sales and Other Dispositions of Capital Assets, which the customer who receives a copy of 1099-B must file. The broker enters a code on the 1099-B matching the code from the applicable checkbox on Form 8948. Those codes are:

• A: Short-term transactions with reportable basis
• B: Short-term transaction not reported to the IRS
• D: Long-term transactions with reportable basis
• E: Long-term transaction not reported to the IRS
• X: Unknown holding period

The form requires the usually identifying information for the broker and the customer, including names, tax identification numbers and addresses. The form also records the customer’s account number and the CUSIP number of the security.

The required data for the sales transaction includes:

• Property description
• Dates acquired and sold
• Proceeds
• Cost basis and adjustments, such as market discounts and wash sales
• Code indicating a wash sale, the sale of a collectible, or a market discount
• Short- or long-term gain/loss
• Indication of whether the basis was reported to the IRS, and whether the gross or net proceeds were reported
• Federal income tax withheld
• Whether the security is non-covered, meaning the cost basis doesn’t have to be reported. This applies to certain complex debt instruments until 2016.
• Disallowed losses
• Realized profit/loss on closed contracts
• Unrealized profit/loss on open contracts
• Aggregate profit/loss on contracts
• Gross amount bartered
• State information, including state tax withheld

Filing Requirements

Form 1099-B is multi-part:

• Copy A goes to the IRS
• Copy 1 goes to a state’s tax department
• Copy B goes to the customer
• Copy 2 goes to the customer, who attaches it to a state tax return
• Copy C is the broker’s file copy

Brokers must send Copy B and Copy 2 to the customer by February 15. Paper versions of Copy A go to the IRS at the end of February, but electronic versions don’t have to go until the end of March. If the customer is a nonresident alien and you’ve withheld federal income tax, you must also file Form 1042-S.

Accompany your filings of Form 1099-B with the Form 1096, Annual Summary and Transmittal of U.S. Information Returns.

If you miss your filing deadlines, the IRS can assess penalties that can’t exceed $1.5 million per tax year. Brokers can relieve the stress of filing the very detailed form by purchasing Form 1099-B software to load the data and print/mail or electronically transmit the forms. An even easier solution is to use a service bureau to do the preparation and filing for you.

Mortgage companies, bond issuers and other lenders sometimes must deal with deadbeat borrowers and abandoned properties. The mortgage crisis of 2007-08 caused many homeowners to lose their homes, a condition that is only slowly getting better. For mortgage lenders and those who make secured loans, times have been tough and have led to the assumption of properties that served as collateral. When this occurs, lenders must send copies of Form 1099-A, Acquisition or Abandonment of Secured Property, to the IRS and to the borrower.

Secured Property

The property covered by Form 1099-A is any real, tangible or intangible property that served to secure a loan. A couple of exceptions don’t require filing of the form:

1)    Property is located outside of the United States and the borrower is an exempt foreign person.

2)    The property is tangible personal property, such as a car, that the borrower didn’t use for business or as an investment.

Sometimes, multiple owners — investment pools, trusts, government units, subsequent holders, etc. — share a loan. In this case, a responsible person, such as a trustee or owner of record, files Form 1099-A on behalf of all the co-lenders.

Do not confuse multiple owners of a single loan with multiple lenders that have extended different loans secured by the same property. For example, if a company mortgages a factory to three different lenders and then defaults on a payment, one or more of the lenders may foreclose on the property. If this happens, all the lenders must file Form 1099-A, because the value of their claims on the collateral is reduced.

Abandoned and Acquired Property

Some borrowers simply walk away from the property they’ve used to secure a loan on which they can no longer make the payments. This is abandoned property and lenders must file Form 1099-A if they become aware of the fact. The IRS expects you to know, or have reason to know, when a borrower abandons a secured property, if the information was available through a reasonable inquiry. The reporting requirement arises no later than three months after learning of the abandonment or upon foreclosing on or selling the property.

Acquisition occurs at the earlier of the date you took title or the date upon which you received the burdens and benefits of ownership. Sometimes, the borrower may object, and if there is an objection period, your acquisition dates from the end of that period. If you buy a secured property sold to satisfy a debt, the acquisition date is the date of sale or the date the borrower’s right to redeem the debt expires, whichever occurs later.

Filling Out Form 1099-A

Here is the information the lender must provide when filling out Form 1099-A:

• Identifying information of lender and borrower, including federal identification numbers
• Account number
• Date of lender’s acquisition or knowledge of abandonment
• Balance of principal outstanding, not including accrued interest or foreclosure costs
• The property’s fair market value, which can be the gross foreclosure bid price or the appraised value
• An indication whether the borrower was personally liable for repaying the debt
• Property description, include the address of real property, the section, lot and block if necessary, or the type, make and model of personal property such as a car, office equipment or abandoned crops that secure a Commodity Credit Corporation loan.

Filing Rules

You must accompany Form 1099-A with a copy of Form 1096, Annual Summary and Transmittal of U.S. Information. If you forgive all or part of the loan, file Form 1099-C, Cancellation of Debt, instead of filing Form 1099-A. File paper copies with the IRS by the end of February and electronic copies by the end of March. File a copy with the borrower by the end of January. To save time and resources, you can use a provider of mail house solutions to print, fold, stuff and mail your returns. If you are a bank or financial institution with many copies of Form 1099-A to complete, consider buying 1099-A software that allows you to enter the information and then create the file, which you can print off or transmit electronically. You can also hire a service provider to take all the work off your hands. The IRS assesses penalties for failure to file Form 1099-A, up to $1.5 million per tax year.

Corporations often offer incentive stock options to some set of employees as a bonus or reward for work. As we described in our discussion of Form 3921, these incentive stock options (ISOs) are valuable because they allow employees to purchase company stock at a discount, as long as certain tenure conditions are met. Once an employee exercises an ISO, she might want to sell the stock or transfer the shares out of the company and into her brokerage account. When this occurs, the corporation must file Form 3922, Transfer of Stock Acquired Through an Employee Stock Purchase Plan Under Section 423(c).

Requirement to File

The corporation issuing the ISOs must report on Form 3922 the transfer of the stock resulting from the option exercise if certain conditions are met:

1. Section 423(c) of the tax regulations governs the ISOs.
2. The employee sells/gifts the shares or transfers them to an account outside the company.
3. The exercise price of the ISO is less than 100 percent of the stock’s value on the grant date, or the price is indeterminate on that date.
4. The shares must have serial numbers, and physical certificates must have a unique color.
5. The employee has filed a W-2 Form and is not a nonresident alien.
6. The issuer of the stock is the stock’s corporation, a related corporation, an agent of the corporation, a third party such as a brokerage firm that is distributing the stock and any party who controls the payments to employees of the corporation.

The corporation must issue a copy of Form 3922 to the employee by January 31 and to the IRS by February 28 if filing paper copies or March 31 for electronic filings. Note that no tax is due from the transfer to an outside broker if the employee remains the beneficial owner. If sold, the employee must report the sale as a gain or loss.

Filling Out the Form

Enter the following information onto Form 3922:

• Corporation identification
• Employee identification
• Account number
• Date the option was granted
• Date the option was exercised
• Fair market value of shares on grant date and on exercise date
• Exercise price
• Number of shares transferred
• Date that legal title was transferred
• The exercise price as if the options were exercised on the grant date

Filing Form 3922

A large company that grants many ISOs to many employees faces the huge task of issuing copies of Form 3922 for all option-related stock transfers. The company can choose to completely outsource the job or to purchase Form 3922 software to ease the task. Although an employer could file using paper forms, electronic filing is required when the number of forms exceeds 250.

Failing to file is not an option, because the IRS extracts penalties for missing, late or incorrect filings. Penalties begin at $30 per form, escalate to $100, and the aggregate fine can reach as high as $1.5 million a year.

IRS Form 1096, Annual Summary and Transmittal of U.S. Information Returns, is somewhat unique, because it’s a form about other forms. Its purpose is to serve as a cover form when you have to file certain other tax forms, usually ones related to your status as an employer or trustee/custodian. You only use Form 1096 when filing by paper — there is a different procedure for electronic filing.

Form Design

Form 1096 has many boxes. Start by filling in the following identifying information:

• Filer’s name
• Street address
• City, State, Zip
• Name of person to contact
• Telephone number
• Email address
• Fax number
• Employer identification number
• Social Security number
• Total number of forms

Next, you’ll report tax information:

• Federal income tax withheld
• Total amount reported with this copy of Form 1096
• An indication as to whether you are filing your final return

Pick a Box

What follows on Form 1096 is an array of 28 boxes, each one with a label and checkbox. Each box represents a different IRS form. Now here’s the kicker:  YOU ONLY CHECK ONE BOX FOR EACH COPY OF FORM 1096. Let that sink in. Theoretically, you might have to file 28 different copies of Form 1096, each with a different box checked, for each employee or client. That would be highly unusual, of course, but realistically you might have to fill out several forms per person.

After checking the appropriate box, you transfer the total amount from the indicated box on the other IRS form to the Form 1096 box for the total amount reported by this 1096 form. The following is the honor roll of forms and boxes:

So, for instance, if you had to fill out a copy of Form 1099-R for each of your clients, you’d check the box for that form and then transfer the amount from Box 1 of 1099-R to Form 1096. If your were required to file Form 1099-INT for those same, or different, clients, you would need to file additional copies of Form 1096, one per client, containing the appropriate checkmark and the total from the client’s Form 1099-INT boxes 1, 3, 8, 10, and 11. If this seems like a huge hassle, well, it is.

Filing Rules

You must file all copies of Form 1096 by the end of February. However, the due date for filing a Form 1096 that accompanies Form 5498 is June 1. If you fail to file in a timely manner, you might have to pay fines. If you file electronically using a service provider or software, make sure that the provider or software automatically prepares and transmits Form 1096 on your behalf. If you are filing 250 or more copies of Form 1096, you must file electronically.

Here’s a quiz.

What form is was updated a couple of years ago to include more information, is issued millions of times each year, revised almost as many millions of times each year and seldom appears in its designed format?

If you answered form 1099-B, you win the prize.

The largest number of forms 1099-B issued go to stock and bond investors from their investment houses. However, practically no investment house reports the proceeds from the sale of stocks and bonds on the actual form 1099-B. Instead, the companies that handle these transactions use a larger format brokerage statement to lay out their information. This makes sense when you realize that most investors have more than one stock holding. An investor whose portfolio buys and sells dozens, or even hundreds, of transactions each year needs a more efficient way to distribute this information.

Brokerages also use form 1099-B, generally in the form of a brokerage statement, to report sales of futures contracts, commodities, foreign currency contracts, and options.

The tax laws changed a few years ago, requiring the brokerage companies to include the basis of stocks and bonds sold on their 1099-B, something they should have been doing from the start.  New software was developed (Congress gave the companies two years to phase it in) and all requirements have now been met.

Unfortunately, what has been happening since the new rules came into effect is that the initial statement is released by the deadline of February 15th (Congress graciously gave the brokers two additional weeks each year to get the information out) and corrected statements – sometimes more than one – keep coming well into March. So, taxpayers who file their returns any time before the end of March have run the risk of having to file amended returns when “revised” 1099Bs unexpectedly appear in late March.

Other types of investments might well appear on form 1099-B, including sales of gold and silver, classic comic books, classic cars, collectible stamps, investment art, historical documents and so forth.  Because these are generally single item sales, they fit nicely on the 1099-B.

Barter transactions are also likely to be reported on the form. Barter transactions are not as rare as people think. There are even organizations that people can join to offer their services to others in exchange for something they need.

The IRS makes a distinction between the dentist who casually exchanges dental services with the plumber who fixes his pipes, and two individuals working through an established barter exchange program. The casual exchange between the plumber and the dentist does not require a 1099-B. Instead, the value of the exchanges should be reported on a 1099-misc and both parties should enter that information on schedule C, form 1040, subtracting any expenses involved. Registered exchangers who received benefits from an organized exchange should receive a 1099-B. Their information will also be entered on schedule C, form 1040.

You’re driving down the road when suddenly you see it: the car of your dreams! There it is with a “For Sale” sign on it!

You screech to a halt and get out to examine it. Pristine! No rust, no wear and tear, low mileage. You have to have it!

You make the deal, and bingo! You now own two cars, only one of which you want.

So, what do you do now? Sell the extra car? Not likely. Too old, too beat up. Okay, then donate it. There’s a fire department/children’s charity/public radio station out there that will benefit.

So, how do they benefit exactly, and how could you possibly benefit on your taxes?

This used to be a wide open game, with taxpayers claiming they were donating vehicles (including not just cars, but motorcycles, boats and even airplanes!) worth many thousands of dollars.  Donors simply referred to printed guides like the Blue Book to determine resale value and that was the number they claimed.

The rules that guide valuation of donations changed a number of years ago. The IRS was no longer willing to allow donors a huge deduction for something that the donee organization might gain only a few hundred dollars benefit from.

Now the rule is that the donee organization must report back to the donor the value of the benefit they derived from the donated item, provided the item has a fair market value of more than $500. If the donated item is a car with a fair market value of $1000, for example, then the donee organization has the choice of (a) using the vehicle in its mission (delivering meals on wheels, for example) or (b) improving the vehicle to increase its value, (c) selling the vehicle for more than $500, but still at a below-market price, or (d) donating the vehicle as-is or after being fixed up to a person in need.

The donee is required to use form 1098-C to confirm to the donor which path it has chosen. If they choose (a), then the donor can claim fair market value for the car as their itemized deduction. If they choose (b) the donor can also claim a deduction for the fair market value of the car. If they choose (c) the donor can claim either  the fair market value of the car as of the date of donation or the amount the car was sold for, whichever is less. If the choice is (d), fair market value may be deducted by the donor.

All of this pre-supposes two things. First, the fair market value of the donation  must be less than the donor’s basis in the vehicle. Second, the donor must meet the requirements to be able to itemize their deductions on schedule A, which is where charitable deductions are taken.

If you run a gambling establishment, you have the opportunity to make a small percentage of your customers very happy. That happiness is tinged to some extent by their need to pay taxes on certain gambling winnings. This requires you, as the payer, to record and report key information to the IRS and the lucky winners. For this, you use Form W-2G, Certain Gambling Winnings.

Reportable Winnings

Form W-2G reports winning and withholding amounts for a variety of gambles:

• Horse racing and dog racing
• Jai alai
• Sweepstakes, wagering pools and lotteries
• Bingo, keno and slot machines
• Poker Tournaments
• Other wagering

The winnings must meet certain requirements to be reportable:

• Minimum payoffs: $1,200 from bingo or slots, $1,500 (reduced by the wager) from keno, and $5,000 (less the wager or buy-in) from poker
• Other winnings, reduced by the wager, are at least $600, 360 times the bet amount, or are subject to federal income tax withholding
• Tax-exempt organizations may have to file Form W-2G, even for charitable events

Withholding Rules

The normal withholding rate is 25 percent is the winnings, minus the wager, exceeds $5,000. However, bingo, keno and slot machine payoffs are exempt from normal withholding. The withholding applies to noncash payments as well, such as when you win a car or a trip to Disneyland, as long as the net value exceeds $5,000. If the payer shells out the withholding tax on the winner’s behalf, the rate climbs to 33 1/3 percent.

Backup withholding rules apply to winners that can’t provide a correct taxpayer identification number (TIN). The backup withholding rate is 28 percent and it applies to the full amount of the winnings (less the bet amount), not just the part that exceeds the reporting thresholds mentioned earlier.

The winnings of foreigners and non-resident aliens are reported on Form 1042, not on Form W-2G. Winnings and withholdings can be reported to state and local authorities as a convenience on Form W-2G.

Form W-2G

Form W-2G has many boxes and many rules, as you would expect given the broad range of gambling activities subject to withholding. Some of the rules are arcane. For example, if you place a $12 box bet on a trifecta, the rules apply as if you had placed six $2 bets. However, if you bought six $2 tickets on the same horse to win, you’d treat the bet as a single one for $12.

The information on Form W-2G includes:

• Identities of payer and winner, including the winner’s TIN
• Date and amount of winnings, including additional winnings from identical bets
• Type of wager
• Federal income tax withheld
• Race or game number
• State and local winnings
• Wager-specific information for type of gamble (animal racing, poker, etc.)

While you could manually complete and file a W-2G for each applicable winner, you can save a lot of time and effort by using software that loads the data to the forms, prints it and/or electronically transmits it to the IRS. Even easier is to hire a service bureau that does all the work for you.

As of April 2014, American households owed $11.68 trillion in debt, which is up 3.7% from last year.

With so many jobs lost and so many people having to take lower paying jobs, there is often not enough money in a household budget to pay these debts. Sure, a household can declare bankruptcy, but that might be overkill, if there are only a couple of accounts that the family is past due on.

Enter the collection agents. They call you, and call you, and call you. You make payment agreements, you pay them some money, but the fees and the interest charges keep ballooning the amount due.  Finally, someone offers you a deal: You pay us $3000 and we’ll forgive the remaining $7000.

You scrounge around and come up with the money, glad to be off the hook for the debt, glad to not be getting the day and night phone calls. Relief!

Then January comes and you get this form in the mail, this 1099-C. You have no idea what it is or why you have it or what you’re supposed to do with it.

Well, guess what. The collection agent never told you this, but the amount of debt that was forgiven, the $7000, has now been declared income to you. The thinking is that you benefitted by that amount, and you shouldn’t get that for free. So, the amount that was forgiven now has to be added to your tax return as income and you have to pay taxes on it.

Here’s the trick, when you get one of these. It is called form 982, Reduction of Tax Attributes Due To Discharge of Indebtedness. Don’t let the name of the form scare you. What you really want is the worksheet that goes with the form.

This worksheet has two sections: assets and debts. There is a date on the 1099C, which is the date the original debt was cancelled. As of the day before that date, you list the values of what you owned and the amounts you owed (including the debt that would be cancelled the next day.) You’ll have to estimate some things, like the values of your furniture and books and jewelry. Just do the best you can. Other things, like the value of your cars, you can look up online. You can also look up how much money was in your bank accounts that day and how much you owed on other credit cards or your mortgage.

When everything is laid out on the form, you subtract the total value of your assets from your total debt. If the amount that remains is debt, and it is more than $7000, then your financial situation as of the date of cancellation was that you were insolvent, even if you were not in bankruptcy. That means you don’t owe any taxes on the $7000 that was cancelled. Pretty neat, huh?

So, you enter the amount of your insolvency on the 982 and include it with your tax return. Voila! Off the hook again!!

What is the single best tax break middle-class taxpayers get?

Education?  Well, education is pretty good when you can claim it, but the numbers of households that can do that are limited.

Medical? No, not unless a household has suffered catastrophic medical costs in a given year.

Child Care? Not even close.

The single best break for middle class taxpayers is home ownership.

Home ownership means having a mortgage and paying property taxes. Quite a burden, financially, but the government helps you carry it. You’re busy building equity as you pay for your home, while the government lets you deduct your mortgage interest and property taxes from your income, reducing your tax liability.

Claiming those deductions means using a schedule A. Schedule A offers the opportunity to itemize and deduct more than just mortgage interest and property taxes. Other types of taxes, charitable giving, medical expenses, employee business expenses and several miscellaneous expenses can all be deducted as well. As long as the itemized amounts exceed the standard deduction, the taxpayer gets the advantage of paying less tax.

Form 1098 is the Mortgage Interest Statement. This is the report the bank sends every year detailing the amounts that can be claimed for mortgage interest, points or origination fees and property taxes. The interest from home equity loans or home equity lines of credit is also reported on a form 1098 and is deductible, as well.

Sometimes this information is included on the last monthly account statement of the year. Most of the time a form 1098 is sent to the property owners separately, no later than the end of January each year.

The 1098 names the lending institution and gives its ein. Box 1 details the amount of interest that has been paid throughout the year. If late payments were made during the year, and late fees paid, those amounts should be included in the mortgage interest amount.

If this mortgage is new, for a home purchase or because the mortgage has been refinanced during the year, points might be included in Box 2 of the form. Points are a pre-payment made at the time the loan is instituted, in order to lower the rate of the loan. Each point represents one percent of the total amount borrowed, and is either paid in cash at the closing or rolled into the refinanced amount.

Points that are paid in advance of a loan are fully deductible in the year they are paid. Points paid as part of a refinance are prorated across the number of months the new loan is for (360 months, 180 months, 120 months, etc.)

Any amount that appears in Box 3 represents a refund of overpaid interest from a prior year. If the mortgage interest was a deduction on schedule A in that year, the Box 3 amount must be included as miscellaneous income on line 21 of form 1040.

Box 4 generally shows property tax payments made through the mortgage escrow.

Box 5 is used for information purposes.

Did you know the US government wants to give you thousands of dollars for college?

Did you know there are four different ways they will give you money back on your taxes for college expenses?

Did you know you can claim student loans – even if you haven’t even started paying them back yet – to qualify to get these benefits?

Well, you do now!

There are four ways to deduct your education expenses on your tax return:

*   The American Opportunity Credit

*   The Lifetime Learning Credit

*   The Tuition and Fees Adjustment

*   Employee Business Expense Itemized Deduction

Each of these opportunities has different rules, each offers different savings on your taxes and each appears on a different area of your tax return. The one thing they all have in common is Form 1098-T.

Form 1098T is the tuition statement each college and university is required to send every student every year. The form details the student’s name, school name and ein (identifying number), tuition billed or amounts paid, scholarships or grants paid to the school on behalf of the student, and any adjustments made for a prior year.

The tax preparer for the parents of the student (unless the student does not have parents or guardians who support them) uses this information, entering it into the tax form that will give the taxpayer the best outcome. They also can add other items, depending upon which credit, adjustment or deduction they are taking, like fees, books, supplies or mileage, so it is a good idea to have this information available as well. The one thing that none of these tax benefits does anything with is room and board.

Any tuition that has been paid by a scholarship or a grant is not eligible for any of the deductions. However, any tuition and expenses paid for by student loans of any sort are. Student loans count as funds paid by the family or the student, and are eligible for all of the tax benefits.

One credit in particular, the American Opportunity Credit, is very generous. The maximum amount of the credit is $2500 per student. That can be enough to pay for a semester, or even a year, at a community college. Another feature of this credit is that at least 40% of it will be added to the taxpayer’s refund, even if the taxpayer does not have any tax liability.

The Lifetime Learning Credit is ideal for students who have already used their available four years of the American Opportunity Credit, but have continued in school, possibly to graduate school. It is also ideal for adult learners taking a class they are interested in. The Tuition and Fees adjustment works for this as well.

Employees who are taking classes to improve themselves for their jobs are able to take these expenses, including books, supplies and mileage, as employee business expenses on their itemized expenses, assuming they are able to itemize on schedule A.