@AmyC thanks for your time. I think where i am getting confused is in the following:
Box 1—Wages, tips, other compensation.
Show the total taxable wages, tips, and other compensation that you paid to your employee during the year.
I did report their total wages and tips in Box 1. However, I did not pay the tips to them, the tips came from customers. I think i am starting to see what i need to do; and please let me know if you think i am right. I think i need to then also record their tips in my business income, to record as you mentioned the money coming in and then going out. ? In other words, when they receive tips, i need to record it as income, and allow them to keep the tips, which would appear as an employee wage expense.? Or, as in the suggestion by @MarilynG1 for the original question, do i simply enter wages and tips in the tax software, keep them combined for Box 1 of the W2, and then not enter as business income?(I dont think this is right, but it seems to be the alternative and the reason for it being something i cant seem to grasp! 🙂 )
