How to handle tip income on my son's return?

Question

My 20-year-old son attends college full-time out of state. He works part-time in our home state in the summer and recently started a part-time job at a restaurant near campus. He earned $3,800 in the summer and $1,800 at the new restaurant job at school. Of the $1,800 at the restaurant job, $1,100 was hourly pay and $700 was tips. We do not claim him as a child dependent on our "Married Filing Jointly" tax return so he can claim the Education Credit. (1) Does he have to claim the $700 in tips on his federal tax return? and (2) Does he qualify as our "Other Dependent"?

TaxMorgan · Answer

Hello FSL123,

Yes, he would need to report the $700 in tips as income, but he would also likely be able to claim the tips deduction for that income.

The IRS has a tool that can help you determine if your son qualifies as a dependent, which can be found here:

https://www.irs.gov/help/ita/whom-may-i-claim-as-a-dependent

Please note that if you claim your son as a dependent, then he would need to indicate that on his return and would not be able to claim education credits. The education credits would be claimed on your return.

Raphness · Answer

His filing status would be "single", and yes he would need to report the 700 as tips, but he would be able to exclude the tips on his return.