Which Line on 1120-S Tax Return to Deduct Tips Expense?

Forum|Forum|1 year ago
September 4, 2024
3 replies
26 views

Hi,

I have a restaurant client that recieves a Form 1099-K and files an annual Form 1120-S. For the return, I have the Line 1 gross receipts or sales match the Form 1099-K amount then treat the tips as an expense. Has the IRS specified which line on the return to put the tips expense under? Under the Salaries and Wages Line (Line 8), under the Other Deductions Line (Line 20), or deducted another way?

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Best answer by Terry53029

Tips should be reported on the employees W2, and deducted as wages

T

Terry53029

Intuit Community Champion

Tips should be on employee's W2

T

Terry53029

Answer

Intuit Community Champion

Tips should be reported on the employees W2, and deducted as wages

sjrcpa

Level 15

Jeffrey is saying tips are in the 1099-K (ones put on credit cards) as income.

If you're including them in income on the 1120-S, I'd put them on Other Deductions line since they are already included in W-2s.

The more I know the more I don’t know.

George4Tacks

Level 15

Sue said "If you're including them in income on the 1120-S, I'd put them on Other Deductions line since they are already included in W-2s."

George may have not had enough coffee yet this morning, but if they are already included in wages, doesn't that deduct them? Putting them as an Other Deduction would then deduct them again.

Please be kind, it is early.

Answers are easy. Questions are hard!

J

judys3

Level 6

You would add a new expense category for "tipped wages". This is a very gray area still.

I personally do not think tips should be included on the 1099-K. You are not reporting them in any sales tax reports reported to the state so why should they be reported on the 1099-K

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