If taxpayers have the type of jobs that normally include income from tips (i.e. waiter/waitress, bellhop, motel/hotel housekeeper, etc.), be sure to ask about any tips they may have received.
All tip income is subject to federal income tax. Individuals who receive $20 or more per month in tips from one job must report their tip income to their employer. Tips that are reported to employers are included in the amount on Form W-2, boxes 1, 5, and 7.
Self-employed taxpayers should include their tips in gross receipts on Schedule C, for example, self-employed hair stylists and manicurists.