where does turbo tax account for the new tax exemption for tips when they are already rolled into box 1 on w2?

[smvetterman]

I am a massage therapist and tips we collect are exempt up to $25,000. The credit card tips collected through my employer are reported as income in box 1 on my W2. I see the uncommon situation box where one might enter UNREPORTED tips, but these are already reported. They just need to be separately considered from wages in box 1.

[JamesG1]

If your W-2 lacks Box 14, you may still claim the 2025 tip deduction in TurboTax. Your employer may have reported your qualified tips on some other document. 

After entering your W-2, select Tips included in box 1 of my W-2, but not in boxes 7 or 14 at the screen Let's check for other situations. 

TurboTax will ask you a few questions about your tips, and automatically calculate the deduction if you qualify.

See also this TurboTax Help.

[Edited 02/02/2026 | 4:39 PM PST]

@smvetterman 

[Gatto0811]

Appreciate your answer, but it appears that it applies only to the on-line version of TT. There is no similar query in the desktop version. Do you know if/when TT will issue an update so that the the 2 versions are in agreement? and, if not, how does one handle the same situation when using the desktop version of TT?

[DianeW777]

The Tips deduction question applies to both TurboTax Desktop and TurboTax Online.

After you complete the W-2 information you will reach a screen:

1.  'Let's check for other situations', select the checkbox next to 'Tips not reported on my W-2'. 
2. Once this is completed TurboTax will walk you through the remaining questions about your tips. 
3. The next screen is 'Now let's enter your unreported tips'.
   • What's the new tax law for for tips?
   • No Tax On Tips: How it Works in the One Big Beautiful Bill

@Gatto0811 

[slizotte49]

Unfortunately, TurboTax Desktop does not yet have the Tips included in box 1 of my W-2, but not in boxes 7 or 14 after entering your W-2 in the special circumstances but they updated TurboTax Online a month ago.  3 Desktop updates over the weekend but not a fix yet.  Any idea when Desktop will be updated for this function?  Very frustrating.

[slizotte49]

My Tips are included in Box 1 of the W-2 not unreported...we need the desktop version to match the online version.

[RogerD1]

I just checked the desktop version of TurboTax and there is now an uncommon situation listed for "Tips included in box 1 of my W-2, but not in boxes 7 or 14".  Please be sure to allow updates to run once you open the program in order to get the latest updates.  You can also update manually by clicking on Online in the black banner at the top of the screen and selecting Check for updates from the dropdown.