Tip Income Reported on Form 1040 (continued)

Case Study (continued)

If Fred did report his tip income to his employer, the tips would be included in box 1 of the Form W-2 that he received from the barbershop. The amount in box 1 of that Form W-2 would be $2,150 ($1,950 plus $200). Fred would still enter $25,650 on line 7 ($23,500 plus $2,150).