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My grandson works as a tax preparer in a Deli/restaurant and gets paid a hourly wage plus a "promised tip" fixed amount per hour worked. All tips both cash and credit card from customers are collected by the owner.
His hourly wage and promised tip amounts are shown separately on his paystub and both are included in his W-2 as earnings which is taxed for both FICA and Medicare purposes. Does this tip earnings qualify as a reduction to earnings on his tax return per the OBBB? Thanks.
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@SC Swede wrote:
My grandson works as a tax preparer
Have you asked your grandson what the rules are for claiming the tip deduction? If he is a tax preparer, he should be fairly familiar with those rules.
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OOOPs! Apologies to all but I just noticed in my original note that I said my grandson was a tax preparer; how that happened I can only attribute to fat fingers of mine and a poor review of note. He is a food preparer behind the counter at a Deli/Restaurant. I don't know if that changes anyone's answers but I needed to at least correct this error. Again my apologies to the community.
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"hourly wage plus a "promised tip" fixed amount per hour worked. All tips both cash and credit card from customers are collected by the owner."
So, that's Pooled Tips. Not directly from the customer to him specifically (otherwise, the amount would vary and isn't a promised amount per hour). Maybe that will be helpful for your research.
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