Tips deduction

Forum|Forum|4 months ago
February 10, 2026
2 replies
6 views

When is TurboTax expected to release an update for the desktop version to allow for claiming the tax deduction for tips included in Box 1, but not identified in Boxes 7 or 14? I understand that a fix has been updated for the online version but not the desktop.

JamesG1

Level 15

TurboTax Desktop Deluxe will report the tip deduction for tip income included in box 1 of the W-2 but not reported in box 7 or box 14. Follow these steps:

Enter the W-2.
At the screen Let's check for other situations, select Overtime. Click Continue.
You will be asked several questions about your tip income and your job description and duties.

The deduction you receive will phase out if your modified adjusted gross income (MAGI) is above:

$150,000 for Single, Head of Household and Qualifying Surviving Spouse filers
$300,000 for Married Filing Jointly filers

Married couples must file a joint return to claim this deduction. Married Filing Separately doesn’t qualify.

See also this TurboTax Help

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Gatto0811Author

Level 2

Thank you, but this doesn't really answer my question. I also have some OT to deduct, and your reply fits perfectly for that, but tips are not addressed. My issue is that my tip income is nearly 2 1/2 times that of my hourly wages, and to add tips into the OT would create obvious problems. The on-line version allows for separate reporting of tips---I am looking for the same approach in the desktop version

AmyC

Level 15

On the desktop version:

Edit the W-2.
At the screen Let's check for other situations, select Tips Not Reported on my W2.- just below Overtime.
Continue.
You will be asked several questions about your tip income and your job.

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Gatto0811Author

Level 2

I understand your reply, but again, it does not really answer the question. My tips are already included in Boxes 1, 3, and 5 on my W-2, and I have been taxed on those tips for the entire year. Blocks 7, 8, and 14 are empty.

When I try your recommended approach, and add in the amount of the tips based on end of year pay stub, I am effectively adding new income to be taxed, and my return reflects just that.

The Overtime provision works well, but the tips income needs to be addressed.

I know that the online version has been modified to account for the no tax on tips provision, but the desktop version has not.

Is TurboTax issuing a new update for desktop users?

DoninGA

Level 15

@Gatto0811 Enter your employer reported Tips in box 7, then the TurboTax program will automatically calculate the deduction and enter it on the Form 1040 Line 13b.