If you report the tips as compensation to the employees and list it in box 1 on their W-2 form, then you need to include the tips as income on your business tax return, so the two amounts cancel themselves out. The wages on line 26 of schedule C should be no less than the amount reported on your W-3 form for gross wages.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
