How do I deduct tips from my 1099-K/Schedule C Business Income

sunreirei
sunreirei Member Posts: 2 Newcomer
in Credits/Deductions

For context: I am an independant contractor hairstylist and I got a 1099-k form in the mail from my point of sale system, but was told to file all the income under Schedule C as Business income. All my card transactions, including tips, are all added together as a gross amount on my 1099-k form. I keep record of all my tips, and know the exact dollar amount of tips to deduct, but cannot seem to find the place to report those tips on Freetaxusa unless I fill out a W-2…. which I don’t have because I am self-employed. How am I supposed to write my tips off correctly under a Schedule C? Or am I not able to?

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Best Answer

  • Austyn
    Austyn FreeTaxUSA Agent Posts: 39 image
    Answer ✓
    Hi sunreirei,

    Since you have a 1099-K, you do have a path to claim the qualified tips deduction in our software. Here's how to enter your tips:

    1. Go to Income
    2. Select Business Income (Schedule C)
    3. Select to Edit your business
    4. Select Edit next to 'Income and Returns
    5. Continue through the screens until you reach the 'Tell us about your other income' page
    6. Here select 'Yes' to the question, 'Did you receive a Form 1099-K reporting income for this business?
    7. Report the qualified tips under 'Enter any qualified tips that were included on your 1099-K, Box 1a'

Answers

  • sunreirei
    sunreirei Member Posts: 2 Newcomer

    Thank you so much! I did end up figuring it out this exact way before you posted this, so thank you for answering!!!

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