Many teens are starting summer jobs and may earn tips. Tips are a nice bonus because they’re extra cash before payday. They can also result in a tax deduction. Employees who earn tips from jobs like waiting tables, delivering food or other eligible occupations may be able to deduct up to $25,000 of qualified tips income (subject to an income-based phaseout) on their federal tax return through 2028. Payroll and any applicable state taxes still apply. Tip earners must keep detailed records and ensure all tips income is properly reported on their wage or information statement and on their tax return. Contact us with questions.
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