Wages for QBI calculation

[joycec]

When determining wages for QBI, are tips excluded if using the simplified method of using Box 1 of the W-2 and adding back Box 12 items?

[mdavolio · Accepted solution]

Hi Joyce,

According to Chapter 12 of  IRS Publication 535 (https://www.irs.gov/pub/irs-pdf/p535.pdf), under the unmodified box method, W-2 wages are the smaller of: 1. The sum of the amounts reported in box 1 of the relevant Forms W-2, or 2. The sum of the amounts reported in box 5 of the relevant Forms W-2.

On a W-2, tips are included in boxes 1 and 5.  Allocated tips in box 8 are reported separately.

The Modified Box 1 method and the Tracking Wages method take into account box 12 amounts.

Thank you,

Mike D'Avolio

Intuit