How to Enter Tips for Schedule C

[david3]

Per IRS Notice 2025-69, since tips aren't separately stated on Form 1099s, self-employed business owners can still deduct qualified tips if they kept adequate records. 

PS states that for 2025 tax preparers will have to manually calculate the qualified tips amount. Where are the qualified tips entered in PS? 

The Qualified Tips Smart Worksheet in Schedule C only records tips that are linked to a 1099 and any amounts entered are the few enterable lines doesn't flow to Schedule 1-A. Schedule 1-A doesn't allow manual entries either.

Thank you for your help with this.

[Skylane]

Scroll down on sch C. 

[Terry53029]

It is just below line 48. ALLOCABLE DEDUCTIONS SMART WORKSHEET

[david3]

Thank you.

However, the only option to enter information is SE insurance and 1/2 SE tax. I updated the program thinking there would be a line for tips but there still isn't a line to enter tips.

Where are you entering tips and does it automatically transfer to Schedule 1-A?

[TaxGuyBill · Accepted solution]

---

@david3 wrote:

Per IRS Notice 2025-69, since tips aren't separately stated on Form 1099s, self-employed business owners can still deduct qualified tips if they kept adequate records. 

---

If they have records AND the total tips are included in total amount on a 1099.  Is it on a 1099?

Open a 1099 worksheet (1099-NEC, 1099-MISC or 1099-K) and it has a spot for tips on there.

If it isn't on a 1099, there is no deduction.

[david3]

Thank you, TaxGuyBill.

After your explanation I see that I have to report it on the 1099-K even though the tips aren't separately stated.

I wish, like the others said, that PS allowed an entry on Schedule C in the "Allocable Deductions Smart Worksheet". 

Oh well, back to the 1099-K.

Thanks again!