Taxable tips

Forum|Forum|4 months ago
March 7, 2026
8 replies
147 views

Quote from Guidance for Individual Taxpayers who received Qualified Tips or Qualified Overtime Compensation in 2025 Notice 2025-69 -- "Example 3. Individual D is a self-employed travel guide who operates as a sole proprietor. In 2025, Individual D receives $7,000 in tips from customers paid through a third-party settlement organization as defined in section 6050W(b)(3). For tax year 2025, Individual D receives a Form 1099-K from an online booking platform that is a third-party settlement organization as defined in section 6050W(b)(3) showing $55,000 of total payments. The Form 1099-K does not separately identify the tips. However, Individual D keeps a log of each tour that shows the date, customer, and tip amount received. Because Individual D has daily tip logs substantiating the $7,000 tip amount, D may use the $7,000 tip amount in determining qualified tips for tax year 2025."

So why exactly can we not get credit for our qualified tips when, as an Uber driver, we plainly have documentation of said tips?

TurboTax Self Employed Online

LeticiaF1

Level 12

Yes, Uber drivers qualify for the deduction, because your occupation "customarily and regularly received tips before 2025."

What is the new tax law for tips?

Sammiepie Author

Level 2

The problem is - your program doesn't want to recognise the "statement" that UBER gives us drivers. It should be allowed do to the first year exemption but it doesn't seem to be - so in my case, almost $3000 in deductions are unallowed because they are not on a 1099 but on a statement directly from UBER.

An Uber driver gets tips, just like a cab driver. Unlike the cab driver, the Uber doesn't get a W-2. They might get a 1099-NEC if they received incentives and they would get a 1099-K if their regular pay and tips exceed $20K. In the absence of a 1099, they still report their income, including tips. They just report it as cash income.

Tips are normal in the driver for hire industry, said industry is included in the IRS list of covered industries, tips are received and reported as income. The problem is that since they're not specifically included on a 1099, the Uber driver pays taxes on their reported tips while the cabbie. doesn't.

Next time you do a return for an Uber driver take a look at their annual statement and you'll see what I mean.

But why aren't we given the 1st year exemption that is mentioned in Guidance for Individual Taxpayers who received Qualified Tips or Qualified Overtime Compensation in 2025 Notice 2025-69??? I specifically says written statements ARE acceptable.

I am losing an almost $3K deduction - it certainly isn't right.

LaShaunA3

Level 6

If you received a Form 1099-NEC from Uber that includes your tips, and you also have a separate statement detailing those tips, you can still claim the tip deduction. Follow the steps listed here.