Exhibits

Sample Forms

EXHIBIT 1– Tax Considerations

TAX ISSUE	EMPLOYEE	TAX ISSUE
Payment of Income Taxes	Payroll withholding	Estimated tax payments
Payment of Social Security Taxes	Payroll withholding at 7.65%	Estimated tax payments Computed at 15.3%
Matching Social Security Taxes	Yes - by employer at 7.65%	No
Eligible for Unemployment	Maybe	No
Compensation	Limited to amount exceeding 2% of AGI and reduction for high income individuals	Fully deductible
Deductibility of expensesIncome reporting	W-2	1099

EXHIBIT 1.A. – SCHEDULE C (Click image to Enlarge)

EXHIBIT 1.B. – SCHEDULE C pg. 2 (Click image to Enlarge)

EXHIBIT 2 – SCHEDULE C-EZ (Click image to Enlarge)

EXHIBIT 2.A. – FORM 2106 (Click image to Enlarge)

EXHIBIT 3.A. – LOCAL TRANSPORTATION EXPENSE

WHEN ARE LOCAL TRANSPORTATION EXPENSES DEDUCTIBLE?

All employees and self-employed persons can use this chart.
(Do not use this chart if your home is your principal place of business.)

Home: The place where you reside. Transportation expenses between your home and your main or regular place of work are personal commuting expenses.

Regular or main job: Your principal place of business. If you have more than one job, you must determine which one is your regular or main job. Consider the time you spend at each, the activity you have at each, and the income you earn at each.

Temporary work location: A place where your work assignment is irregular or short-term, generally a matter of days or weeks. Unless you have a regular place of business, you can only deduct your transportation expenses to a temporary location outside your metropolitan area.

Second job: If you regularly work at two or more places in one day, whether or not for the same employer, you can deduct your transportation expenses of getting from one workplace to another. You cannot deduct your transportation costs between your home and second job on a day off from your main job.

EXHIBIT 4 – TRAVEL COMPONENTS

EXPENSE	DESCRIPTION
Transportation	The cost of travel by airplane, train or bus between your home and your business destination.
Taxi, commuter bus and limosine	Fares for these and other types of transportation between the airport and your hotel or between the hotel and your work location away from home.
Baggage and shipping	The cost of sending baggage and sample or display material between your regular and temporary work sites.
Car	The costs of operating and maintaining your car when traveling away from home on business. You may deduct actual expenses or the standard mileage rate, including business-related tolls and parking. If you lease a car while away from home on business, you can deduct business-related expenses only.
Lodging	The cost of lodging if your business trip is overnight or long enough to require you to get substantial rest to perform your duties.
Meals	The cost of meals only if your business trip is overnight or long enough to require you to get substantialrest. Includes amounts spent for food, beverages, taxes and related tips.
Cleaning	Cleaning and laundry expenses while away from home overnight.
Telephone	The cost of business calls while on your business trip including business communication devices.
Tips	Tips you pay for any expenses in this chart.
Other	Other similar ordinary and necessary expenses related to your business travel such as public stenographer’s fees and computer rental fees

EXHIBIT 5 – RECORD-KEEPING REQUIREMENTS

Element to be Proved	Travel	Entertainment	Gift	Transportation (Car)
Amount	Amount of each separate expense for travel, lodging, and meals. Incidental expenses may be totaled in reasonable categories, such as taxis, daily meals for traveler, etc.	Amount of each separate expense. Incidentals such as taxis, telephones, etc., may be totaled on a daily basis.	Cost of gift.	1) Amount of each separate expense including cost of the car. 2) Mileage for each business use of the car, and 3) Total miles for the tax year.
Time	Date you left and returned for each trip, and number of days for business.	Date of entertainment. For meals or entertainment directly before or after a business discussion, the date and duration of the business discussion.	Date of gift.	Date of the expense or use.
Place	Name of city or other designation.	Name and address or location of place of entertainment. Type of entertainment if not apparent. Place where business discussion was held if entertainment is directly before or after a business discussion.	Not applicable.	Name of city or other designation if applicable.
Description	Not applicable.	Not applicable.	Description of gift.	Not applicable.
Business Purpose	Business reason for travel or the business benefit gained or expected to be gained.	Business reason or the business benefit gained or expected to be gained. Nature of business discussion or activity.	Business reason for giving the gift or the business benefit gained or expected to be gained.	Business reason for the expense or use of the car.
Business Relationship	Not applicable.	Occupations or other information – such as names or other designations – about persons entertained that shows their business relationship to you. If all people entertained did not take part in business discussion, identify those who did. You must also prove that you or your employee was present if entertainment was a business meal.	Occupation or other information – such as names or other designation – about recipient that shows their business relationship to you.	Not applicable.