how to enter self employed tips?

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MarilynGAnswer

Alumni - Intuit

Expert Reviewed

If the hairdresser is employed by a salon, they can use Form 4137 to report tips, but it still has to be linked to their W-2 or 1099 form reporting income. A self-employed hairdresser can report income received on a 1099-K with a personal record of tips to report tips. Here's more detailed info from the IRS.

@Raphnessnt

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DawnC

Employee Tax Expert

They have to be reported on a 1099 in order to deduct them. If they are reported on 1099, TurboTax will ask you when you enter the 1099, whether or not any of the income is tips or overtime. How to enter self-employment income. You won't be asked about tips or overtime if your self-employed income comes from only cash or checks (non-1099 income).

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Raphnessnt

Level 2

Can someone please reference IRS rule/regulation that states it "HAS TO BE ON A 1099 form. I am not able to location this information. I do taxes for a Salon/Hairdresser.

MarilynGAnswer

Alumni - Intuit

Expert Reviewed

@Raphnessnt

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TLPP

Level 2

It is not deducting. You enter the amount in box one from your 1099 – NEC And then it asks you if it Includes tips. You say yes, then you enter the amount of the tips. And it is still taxing the tips! How are we supposed to file taxes if the program is not deducting properly?

NCperson

Level 15

do any of these situations apply?

you are filing MFS? - there is no eligibility if so.
your income exceeds $150,000 (filing SIngle or HOH)? - there is an income phaseout to the deduction and that could be the issue.
your tips exceed your Schedule C income. there is no eligiblity if so. What is on Line 31 of Schedule C and how much was the tip income?

Are you looking in the right place for the deduction? it should appear on Line 13b of form 1040.

does any of that solve it? post back!