Taxable tips

[Sammiepie]

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?

[LeticiaF1]

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]

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]

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. 

How do I enter tips in TurboTax online?

[Sammiepie]

thank you - but that's the problem - they aren't on a 1099 they ARE included in my income but not seperated out -- we have a written summary, which the IRS document I listed above says is valid for this year only (after this year all must be documented in a 1099), -- I already did all of the steps that you listed -- however we can't get the deduction because all we have is the summary -- doesn't seem right..... 😕

[RobertB4444]

You can get the deduction.  Read the instructions that you were given that are here.  After you enter the 1099 that has your Uber driver income on it and you go to enter expenses you will be able to tell the system what part of the income reported on your 1099 is tip income.  The system will deduct it for you.  It's all good.

[Sammiepie]

It does not - I get these responses:

Does your other income [$" amount redacted"] include tips not on a 1099-K, NEC, or MISC because:

• You got a statement showing your tips, but not a 1099-K (common for Uber).
  (Other reasons were listed as well, but this is the one that applies to me - I got a statement from Uber, it's not separated out but included in my income.)
  
  to which I get this response: 
  Thanks for that info
  Right now, you can’t deduct tips unless they’re included with your income on a 1099-K, NEC, or MISC.

  This rule could change as early as this tax year. We’ll contact you with the next steps if it does.

  In the meantime, it’s okay to go ahead and file your taxes.
  
  So, I did not get the deductions even tho I have a statement from Uber which should be allowed according to my first messsage inquiry.

[Vanessa A]

So if you are saying that RIGHT NOW, you do NOT have a 1099 from Uber that includes your tips, then you would not be able to take the deduction for tips.  If the tips are included on the 1099, then you WOULD be able to claim the tips. 

 A statement from Uber does not count, but the 1099 they sent you DOES count as they DO include your tips on it.  Do NOT enter the statement from Uber separately.  The only type of tips that would not count with your Uber services would be cash tips that Uber is not aware of.  They are even offering to give those who earned less than the $600 the option of opting in to get a 1099.  

The statement that you received from Uber is in addition to the 1099, so you can enter the tip amount.  Once you enter the 1099, click the button that says you received tips and then enter the amount that is on the statement. 

Tax Deduction for Qualified Tips
Beginning in 2025, a new federal tax law allows individuals to claim an income tax deduction for qualified tips (“no tax on tips”). To claim this deduction, the IRS requires that your tip income be reported on a 1099 Tax Form.

If you do not meet the IRS threshold, you can opt in to receive Forms 1099-K (and 1099-NEC, if applicable) by updating your Tax Settings through the web driver portal or the Uber Driver app. This can help support your claim for a federal deduction on qualified tips.

We recommend consulting a tax professional or service, such as TurboTax, for advice on federal and possible state deductions related to tip income.

[Sammiepie]

I have already requested an updated form from Uber, but I don't know if I will get it in time, as their excuse claims that the statement should count this year due to notice IRS 2025-69