Hi:
No, wage expense for line 26 should be the gross wage paid to the employee. If the employee reports tips to you for purposes of FICA taxes, that is different than the wage you actually paid the employee.
See instructions for Line 26; salaries and wages
https://www.irs.gov/pub/irs-pdf/i1040sc.pdf
Wage expense equal to Box 1 of the W-3 would not be accurate for tips reported but not controlled by the employer.
**Disclaimer: Effort has been made to offer correct information; but due to the discussion forum limitations, the poster disclaims any legal responsibility for the accuracy of the poster's response**
