Do I qualify for tip deduction?

[mckinly16]

Hello, I’m a piano tuner and get tips occasionally. Do I qualify for tip deduction? If so, what industry and job role would I select? A.I. suggests Recreation and instruction for industry and self-enrichment teacher for role but that just seems like a piano teacher. Thanks

[VolvoGirl]

Do you get a W2 for work or are you filing as self employment on Schedule C?     Do you include the tips in your gross income?

[Vanessa A]

Possibly.  A piano tuner would be considered someone who customarily or regularly receives tips.  If you are going to people's homes to repair/tune their piano you would likely be considered home services. 

In order to deduct the tips the following must apply:

• The tips must be reported to the IRS, either on a W-2 or 1099.  Claiming the deduction on unreported tips would be considered double dipping and you cannot do that.
• Your filing status must NOT be married filing separately
• If your MAGI is over $150,000 if single or $300,000 if married filing jointly, then your tip deduction is phased out
• You still will pay Medicare and Social Security Taxes on the tips and likely state taxes, so it is not just a leave it off your return deal.
• Up to $25,000 in tips may be deducted from your income. 

No Tax On Tips: How it works

[mckinly16]

Yes I get a W2 and some of my tips are reported. I also have unreported cash tips that I have entered into turbo tax.

[RobertB4444]

The tips on your W2 can be deducted from your taxable income.  The unreported tips can be reported as self-employment income and then deducted as tip income but you will still pay social security and medicare taxes on those tips.

[VolvoGirl]

@RobertB4444   I'm testing this.  I entered unreported tip income on schedule C under General (Desktop Home & Business version).    Then where do you deduct tip income  to get it on sch 1-A?  

[RobertB4444]

As of right now in order to get the tip deduction the tip income has to be reported to you on a 1099-K, 1099-NEC or 1099-MISC.  It will carry to the 1-A by itself.  That could change and there is an update expected this Friday and next Friday.

@VolvoGirl