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February 27, 2025
Question

Why is it not taking off the money I tipped out off of my taxable income?

  • February 27, 2025
  • 1 reply
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I tipped out roughly 1000 dollars last year, should I deduct it from my income?

    1 reply

    Employee
    February 27, 2025

    Your tip-outs should not be included in your box 1 wages or your box 7 tips.  When you tell your employer about your tips, and when your employer prepares your paystubs and W-2s, you and they are only supposed to include tips you kept, not tip-outs.

     

    There is no official way to adjust this on your tax return.  You should start by asking your employer for a corrected W-2.  If they refuse, you can file your return using a "substitute W-2 form" and enter the box 1 wages you think are correct, instead of the number you think is incorrect.  But this will likely lead to IRS questions for you and the employer.  So make sure you have good records, and don't file with the substitute W-2 until you get a response from your employer refusing to issue a correction.