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Wendy Reed
Wendy Reed, Enrolled Agent
Category: Tax
Satisfied Customers: 3346
Experience:  15+ years tax preparation and tax advice.
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claiming tips in box 7 of w-2

Resolved Question:

claiming tips in box 7 of w-2
Submitted: 7 years ago.
Category: Tax
Expert:  Wendy Reed replied 7 years ago.



Generally tips reported to the employer are placed in box 7, and are also included in boxes 1 and 5. If you fill out the information from the W2 in Turbo tax, you should not have to make any other adjustments, unless you have additional tips to report on your return that you did not report to your employer, and then you would need to use form 4137.

Customer: replied 7 years ago.
I failed to add that when im ready to submit the return, im not getting back those tips, What should i do
Expert:  Wendy Reed replied 7 years ago.
I am not sure what you mean by "getting back those tips". You don't get them back, you have to include them in your income and pay tax on them. They should already be included in the income that was reported via TurboTax.
Customer: replied 7 years ago.
Yes they are but, they are taxed at 100 percent so I should get back most of what was paid.

Here is a sample:
FIC 63.73
SST 62.15
Med T 7.98
NMSIT 12.63

Tips 86.50

Total: 161.63
That means all taxes reported are taxed at 100 percent. Does this clear things up?

Expert:  Wendy Reed replied 7 years ago.

Are these #s from the W2 or a paycheck?

Tips are not taxed at 100 percent. Sometimes when you get paid at a restaurant, most of your wages come from tips, so that the paycheck that you do get have a lot of tax coming out of the hourly wage, but that is to make up for the tips that you received directly outside of your paycheck.



Customer: replied 7 years ago.
This is what it says on a paycheck.


FIT -39.19
SST -34.10
Med T -7.98
NMST -12.63


Tips -86.50

According to this paycheck all tips were taken out.
This means the tips were taken out as a deduction,these are the tips I earned for that week. I earned 86.50 in tips and all of it was taken out, I know it sounds weird but that is exactly what is stated on the paycheck stub.
Customer: replied 5 years ago.
You nevcer did give a clear answer back I will try to clarify. According to the paycheck stub 86.50 was the total of tips made for that month. Also, 86.50 was deducted however, the taxes deducted are more than the total amount of taxes taken out does this clear things up? If so, did the IRS somehow get that extrsa money or do I have to go back to the employer and ask questions?
Expert:  Wendy Reed replied 5 years ago.


I am sorry that I did not respond to your last inquiry--I never got an email to report your last posting.


The IRS should not be getting extra money. I am unclear as to why your employer would be listing tips as a deduction, and why your employer would be taking tips away from you (this is not standard practice) if you earned them, they should not then be deducted from your hourly pay. You should definitely go back to the employer and ask why they deducted your tips from your pay.

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