Level 4

Question

HOW TO REPORT QUALIFIED TIPS ON THE W2 WORKSHEET TO FLOW TO SCH 1-A

Forum|Forum|5 months ago
January 18, 2026
3 replies
55 views

I have a client that on their W2 shows their qualified tips reported in box 14 (also included in box 1). However, box 7 and 8 are blank. How can you properly fill out part III to include the deduction of the qualified tips to flow to schedule 1-A and NOT trigger FICA/Med tax on Sch 2? These are reported tips and not unreported.

Thoughts?

ProSeries Professional

Just-Lisa-Now-

Intuit Community Champion

Have you scrolled down the W2 worksheet to Part III to the Tips section and input the type of profession?

Wait, I misread.....tips are subject to SS./Medicare its only the federal taxes that are a freebie....if no tips are reported in Box 7 and no SS/Medicare has been paid on them, you wont get a deduction.

To get the tips deduction, youd need to pay the FICA on them with Form 4137, Part III lets you do those entries as well.

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪

A

ATBLLCAuthor

Level 4

They did pay FICA and Medicare. The employer included them in box 1 of the W2, but noted it in box 14 (qualified tips included in box 1).

These are qualified tips that FICA/Med have been paid via payroll. I'm only trying to deduct the qualifed tips to flow to 1-A to the 1040.

Just-Lisa-Now-

Intuit Community Champion

Box 1 isnt necessarily subject to FICA. If youve seen the final checkstub and youre sure its been included in Box 3, the W2 was prepared incorrectly, you may need to breakout the tips portion from Box 3 to Box 7. Not really our job, but Im sure everyone will be given lots of leeway this first year.

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪

T

Terry53029

Intuit Community Champion

Here is a sample of what a typical waitstaff employee should receive. You need to scroll down the W2 worksheet (almost to bottom) to enter tips so it flowes to schedule 1a.

Sample W-2 Form (Tipped Employee)

Box 1 (Wages, tips, other compensation): $30,000.00 (Total of $10k wages + $20k tips)
Box 2 (Federal income tax withheld): Amount withheld
Box 3 (Social security wages): $30,000.00
Box 4 (Social security tax withheld): Amount withheld
Box 5 (Medicare wages and tips): $30,000.00
Box 6 (Medicare tax withheld): Amount withheld
Box 7 (Social security tips): $20,000.00 (The amount of tips reported to the employer)
Box 8 (Allocated tips): Blank (Unless the employer was required to allocate tips)
Box 12 (Codes): May show uncollected Social Security or Medicare taxes (Codes A/B)

Just-Lisa-Now-

Intuit Community Champion

Terry, so how does it work with Box 7 empty and Qual Tips in Box 14 only?

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪

T

Terry53029

Intuit Community Champion

Sounds like an incorrect W2. In the past I had several clients that were waitstaff employees, and box 7 was never empty. Maybe the employer was just trying to make sure the employee was not going to be taxed on tips. I would see if I could talk to the employer to see why he filled it out that way, and ask if he could give a corrected W2, and give him the link to IRS on correct W2 instructions. If he refused I would just use the amount he put in box 14 for tips, and file the return.

S

skelly11

Level 2

If the tips are already part of box 1, break them out in box 14 so it does not double count them- put "tips" as the description and choose" Reported tips" as the category- it will then flow through and only count the income once

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