Question
Indirect Tips Payroll Code Issue
I have a question regarding tip payroll codes. There are two types of tips: direct tips received by employees and indirect/paycheck tips paid through payroll. When I use code 12TP, the tip amount is added to gross pay and deducted from net pay, which works for direct tips but not for paycheck tips. Is there another code for indirect tips that will report correctly on W-2 Box 7 and Box 12 while also including the tip amount in the employee’s paycheck calculation? If not, can you create a code for indirect tips?
