Cant file

Allen
Allen Member Posts: 1 Newcomer
in Filing my taxes

When will the issue be resolved that prevent filing stating the IRS has not finalized the instructions for filing no tax on tips

Best Answer

  • Taylor
    Taylor FreeTaxUSA Agent Posts: 23 image
    Answer ✓
    Hello Allen,

    We're currently waiting for the IRS to finalize their instructions regarding the No Tax on Tips deduction for people who received tips on a 1099-MISC, 1099-NEC, or 1099-K. We don't have an exact date from the IRS but anticipate it will be soon.

    Once the IRS provides the final instructions, we'll update our software right away to accommodate the changes. We'll notify you as soon as the update is complete so you can file your return.

Answers

  • Ohio
    Ohio Member Posts: 1 Newcomer

    2/6/26 - I spoke to a gentleman at the IRS yesterday. I am self-employed. I can't claim the No Tax on Tips deduction YET in your software. He said I absolutely am ALLOWED to claim this deduction even without having a 1099! I can file the Schedule 1-A and then the figure goes onto Line 13b of the 1040 as additional deduction. But Free Tax USA cannot accommodate this.

    The IRS person said I can wait to see if your platform can get up to speed with the new law; since I am getting a refund, he said we technically don't have to file our taxes by April 15, we have 3 years to file our returns when owed a refund. But obviously, that means I am letting the government gain interest on my money. He said I can also file manually on paper; which to me is going to be a big pain in the ****. It would be so much easier to file online.

    The other issue with waiting 3 years to file (which I'm not going to do) is that: I OWE my school tax. The school tax is based on my State return and my State return is based on my Federal return. So I really am not allowed to wait to file.

    I really hope all the tax online platforms get up to speed sooner rather than later on the self - employed and no tax on tips issue.

  • TaxMorgan
    TaxMorgan FreeTaxUSA Agent Posts: 47 image
    edited February 8

    Hello Ohio,

    The law, IRS guidance, and IRS 2025 1040 Instructions specifically mention that the tips must appear on a Form 1099 to be deductible.

    "Only amounts that appear in the aggregate on Forms 1099 can be considered qualified tips. Any “cash tips” received. . . in actual cash that don’t appear on Form 1099-K cannot be included in the deduction." (page 104 of the Form 1040 instructions , see TIP below example 2.)

    You can also refer to this guidance from the IRS regarding qualified tips and qualified overtime compensation (see pages 16-17).

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