OBBBA Tip Deduction.

[kimsiche]

My W-2 shows the total wages in Box 1, and my tip amount is correctly reported in Box 7.
Because my employer uses ADP, the W-2 information was automatically imported into TurboTax, and all numbers match exactly.

However, I am still unable to receive the qualified tip deduction under the OBBBA.
I have searched through the “additional deductions” and other related sections in TurboTax, but I cannot find any section related to the OBBBA tip deduction.

How can I properly claim the OBBBA qualified tip deduction in this situation?
Is there a specific form, update, or section in TurboTax that I should wait for or manually enter?

[LaShaunA3]

As you enter your income info into TurboTax, the software will ask questions about your tips and apply the deduction. If the tips are already correct in box 7, there's nothing else you need to do. 



For more information, see

How do I enter tips in TurboTax online?

New Tax Law for Tips

 

[DoninGA]

Since your reported tip income is shown in box 7 of the W-2, the calculation for no tax on tips is automatically calculated on the Schedule 1-A Part II.  The result is entered on your Form 1040 Line 13b.

You can view your Form 1040 plus Schedules 1, 2 and 3 at any time using the online editions. Click on Tax Tools on the left side of the online program screen. Click on Tools. Click on View Tax Summary. Click on Preview my 1040 on the left side of the screen.

[kimsiche]

I don't quite understand. You mentioned the deduction is automatic, but from what I can see, I haven't received any tax deduction for my tips at all. 

[kimsiche]

I cannot find Tax Tools on the left side of the screen. I am currently using the Do It Yourself Premium version. Do I need to fill out Schedule 1-A separately?

[DoninGA]

@kimsiche No, the user cannot complete the Schedule 1-A.  The TurboTax software completes the form for you based on information provided on your W-2 for tip income reported to your employer.

[DoninGA]

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@kimsiche wrote:

I cannot find Tax Tools on the left side of the screen. I am currently using the Do It Yourself Premium version. Do I need to fill out Schedule 1-A separately?

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You must be accessing the TurboTax 2025 online tax return and be in one of the section of the return for the links to be visible on the left side of the screen.

[kimsiche]

As a follow-up to that response, then why am I not receiving the deduction for tips? I wasn't even asked any questions regarding tips. If I report it now without the OBBBA deduction, will TurboTax make the final correction at the end? Thank you for answering my questions.

[DoninGA]

@kimsiche As I initially posted.  The deduction amount for the no tax on tips will be reported on your Form 1040 Line 13b.

Since your reported tip income is shown in box 7 of the W-2, the calculation for no tax on tips is automatically calculated on the Schedule 1-A Part II.  The result is entered on your Form 1040 Line 13b.

You can view your Form 1040 plus Schedules 1, 2 and 3 at any time using the online editions. Click on Tax Tools on the left side of the online program screen. Click on Tools. Click on View Tax Summary. Click on Preview my 1040 on the left side of the screen.

[kimsiche]

@DoninGA Thank you very much for your help.

Because my W-2 form was uploaded automatically, I had not reviewed the details carefully at first. After reviewing it now, I found the questions related to tips, and once I completed that section, the deduction was properly applied.

I truly appreciate your quick and kind assistance.