You may receive additional income in the form of tips. Any tips that you reported to your employer are included with your wages on your Form W-2, Box 1. Although you are not required to report tips of less than $20 a month to each employer, these tips are still subject to income tax. You must also include in income the value of non-cash tips such as tickets and passes, and any other tips received but not reported. Additionally, if your employer allocated tips to you, they are shown on your Form W-2, Box 8. They are not included in Box 1 with your wages and tip income that you reported to your employer.Your employer would have allocated tips to you if:

  • You worked in a restaurant, cocktail lounge, or similar business that must allocate tips to employees
  • The tips that you reported to your employer were less than your share of 8% of the food and drink sales With a few exceptions, you must report your allocated tips on your tax return. If your Form W-2 shows allocated tips, an additional tax may be calculated on Form 4137, Social Security and Medicare Tax on Unreported Tip Income , to cover the Social Security and Medicare taxes that were not withheld from the allocated tips. You may be able to reduce your taxes by deducting certain unreimbursed, job-related expenses. You should keep receipts to substantiate these expenses. Examples of some of the items you may be able to deduct include:
  • Cost and cleaning of uniforms that are required as a condition of your employment and that are not suitable for everyday wear (for example, a white service uniform or a costume uniform would qualify for deduction, but an employer-required uniform consisting of a white shirt, black pants, and black shoes is not distinctive in the nature of a uniform and would not be deductible)
  • Fees for occupational taxes or licenses
  • Employer-required medical exams for which you are not reimbursed
  • Subscriptions to professional journals and trade magazines related to your work