This topic has explained how to report taxable earned income on a tax return, including income from tips, scholarships, and fellowships.
Tip income is taxable. Individuals who receive $20 or more per month in tips from a job must report their tip income to their employer. These reported tips are included with wages on Form W-2, box 1. Employees who do not report tips of $20 or more in a month to their employer must use Forms 4137 and 1040 to report the social security and Medicare taxes on the tips.
Allocated tips are shown separately in box 8 of Form W-2, and are not included in box 1. Generally, taxpayers must report allocated tips on line 7 of Form 1040.
Some scholarships and fellowships may be partially taxable. A taxpayer who does not receive a Form W-2 for the scholarship or fellowship must still report the taxable portion.
|
