1099 Tips

[phillipstaxesaaa]

Hello, I am wondering if I filled out the 1099 Tips part of the form correctly.

Let's say I made $1,307 in Cash as a freelancer. That $1,307 includes $307 of Tips I made related to 1099 gigs that were not reported on a 1099. Later when it asks how much of that income was from tips, I would then put in $307. But should the first number of what I made in cash be $1,000? I'm not reporting the $307 twice on accident, am I? I do have "this income includes tips" selected. 

Or, is this something I don't even need to worry about. I attached some screenshots.

Thanks!

[Vanessa A]

No, you are not reporting it twice on accident with the way you are doing it. The first number should be the FULL amount. 

If your tips were NOT reported on a 1099, then you will not receive the tips as a deduction.  In order to claim the no tax on tips deduction, the tips MUST be reported to the IRS on a 1099 for those who are self-employed.  

So, if you did not receive a 1099 that reported this income, you would enter it as cash, just as you did and check the box as you did.  When you enter it as cash, you would still need to report the entire $1,307. 

When you click on the "This income includes tips" learn more link you will see that at this time those tips are not deductible. This box is for just in case there is further guidance issued by the IRS that says these tips that are NOT reported on a 1099 for self-employed individuals would become deductible.  So entering the $307 is for the just in case.  It is NOT adding it to your income, it is putting it in a spot to possibly deduct it from your income at a later point. 

Right now, self-employment tips aren't eligible for the deduction if they aren't included as part of your total income on a 1099-K, 1099-NEC, or 1099-MISC.

But, this could change, which is why we're asking if you have any tips not included on a 1099 for this line of work.

These could be:
- Cash tips
- Tips that would have been reported on a 1099-K, but you didn't get a 1099-K because you earned less than $20,000 (this is common for Uber and Lyft drivers).
- Tips that would have been reported on a 1099-MISC or 1099-NEC, but you didn't get either form from your payer because you earned less than $600.
- Tips that should have been reported on a 1099, but the payer forgot or failed to give you your form.

No Tax on Tips: How It Works in the One Big Beautiful Bill