The IRS has issued guidance for taxpayers wanting to claim new deductions for qualified tip income and qualified overtime compensation for 2025. The guidance details alternative calculation methods for the deductions because 2025 information forms, including Form W-2 and Forms 1099, won’t be updated to account for the deductions. To determine the tips deduction, employees can use amounts from Form W-2 box 7 or Form 4070 (Employee’s Report of Tips to Employer), while nonemployees can use records like daily tip logs or third-party settlement organization records. The guidance features several fictional scenarios to illustrate how to determine the deductions. For more information: https://bit.ly/44ndJrD
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