What Documentation Shows My Tip Information?

Starting in 2025, you may be able to deduct up to $25,000 of your qualified tips—but to claim the deduction, you need to know where your tips are reported.

Here’s where to look for your tip information:

• Form W‑2 – Employee tips reported to your employer.

• Form 1099‑K – Tips received through card payments, apps, or online platforms.

• Form 1099‑NEC – Tips reported as part of self‑employed or contractor work.

• Form 4137 – Cash tips you report directly to the IRS if they weren’t reported to your employer.

2025 Transition Guidance:

The IRS has guidance coming for tracking tips not reported on the above forms. For 2025, as we wait for further guidance, your deduction can be based on a reasonable method of tracking tips—final reporting rules are coming, but you still need to keep accurate records to ensure proper compliance.

Take Action:

Keep clear records of all your tips—cash, card, or app-based. When your tax forms arrive, make sure the amounts match your records so you can claim the new deduction.

Each week, I share a clear, bite-sized tax insight straight from my continuing education so you can stay informed without sifting through tax changes.

Next week, we share whether this new deduction applies to those self-employed.

Thanks for reading,

Brandy Sparkman, EA

I’ll keep learning so you can stay focused on what you do best.

See you next week for another Tax Minute.