Internal Revenue Service United States Department of the Treasury
Level Basic Advanced Military International

Income

Unreported Tips

Tip Income Reported on Form 1040

Case Study

Fred works as a repairman during the week and as a barber on alternate Saturdays. His tips are less than $20 in any month, and he does not report them to his employer. The amounts from box 1 on his Forms W-2 show income of $23,500 (repairman) and $1,950 (barber). His unreported tip income was $200.

Fred will report $25,650 on Form 1040, line 7. This is the total of his Forms W-2 income and his unreported tip income ($23,500 + $1,950 + $200).

Repairman W-2, box 1

$23,500

Barber W-2, box 1

$1,950

Barber Unreported Tips

$200

Form 1040, line 7

$25,650

Fred working as a barber.