Tax Tip #270

Employees are not the only taxpayers who can benefit from deducting up to $25,000 of tips received from income. Self-employed individuals are eligible as well. The tip deduction can’t exceed net income from the business. 

Examples: 



• Jill has $100,000 of gross income from her hair salon, with $70,000 being fees and $30,000 being tips. Her business deductions are $20,000. Her tip deduction is $25,000. 
  
• Arianna has $65,000 of gross income from her photography business, with $45,000 being fees and $20,000 being tips. Her business deductions are $50,000K. Her tip deduction is $15,000 ($75,000 - $60,000). 

Looking for a tax “tip” to get the most out of tip income? Contact a team member for strategies that can work for you.