Tip Reporting For 2025 Fortunately, there are existing requirements to report tip amounts on Form W-2 and other forms and reports. There are no changes to how those tips are determined, but the deduction applies only for workers in positions deemed by the Treasury Secretary as customarily receiving tips. The Treasury Secretary completed proposed regulations containing a list of nearly 70 tipped job types that include Treasury Tipped Occupation Codes. Will employers need to communicate the code to the affected employees in 2025? Employers likely will choose to report the code for this year’s tips in box 14 of the 2025 Form W-2, or in a separate statement. More than likely, the tipped occupation code will be required in the newly-added box 14b of the 2026 Form W-2 , along with the total amount of qualified tips in box 12, using code TP. Affected employees also will use the Form 1040 Schedule 1A
How the 2025 amounts are to be reported to employees remains an open issue. The law asks the Treasury Secretary to provide transition guidance for this year’s reporting—guidance that, as of this writing, has not been released. While the 2025 Form W-2, Employee Wage and Tax Statement, is not changing, there is space in the “Other” box 14 that employers could use to report amounts to employees. Or, employers could create their own separate notice to send to those workers affected. Also, there remains a question as to whether employers should report the entire total of the half-time amounts that may qualify, or only up to the statutory limit of $25,000 for joint filers. The 2026 Form W-2 draft has a box 12 code TO for reporting qualified overtime amounts. Employees will be claiming the deduction using Form 1040 Schedule 1A ( a draft of the form was released in early September ), to report qualified amounts.
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ISSUE 16 GLOBAL PAYROLL MAGAZINE
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