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Yes, it increases your salary/wages. Tip income is reported on Form 1040 Line 7, related taxes on Line 58.
Because tips are income, they need to be reported on your tax return. Normally, you would report your tips to your employer, who then includes them on your W-2. Whether included on your W-2 or not, enter your tips in TurboTax with the employer's W-2.
For aditional information about unreported tip income, click on Entering unreported tips
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