Wages, Salaries, Tips, etc.
You must include all wages, salaries and tips you receive as an employee of an employer as income on your tax return.
The new tax law didn’t change the treatment of wages, salaries, or tips.
Line 7 of the IRS Form 1040, U.S. Individual Income Tax Return, generally must include:
- all wages you receive;
- all tips that you did not report to your employer;
- dependent care benefits you received;
- employer-provided adoption benefits you received;
- excess elective deferrals;
- disability pensions you received before the minimum retirement age set by your employer;
- and certain scholarship and fellowship income you received.
There are exceptions to the above examples. For full rules, see IRS Publication 17.
If you’re an employee, your employer should have sent you a IRS Form W-2, Wage and Tax Statement.
You can find your total wages in box one (1) of your IRS Form W-2, Wage and Tax Statement. You must separately add and report tip income you didn’t report to your employer.
For procedural information on reporting other forms of income under Line 7 of the IRS Form 1040, see IRS Form 1040 Instructions – [Line 7].
The new tax law didn’t change the treatment of wages, salaries, or tips.
How will this affect me?
Scott is a salaried accountant who makes $75,000 a year. On weekend nights, Scott performs as a country singer at a local restaurant. Scott isn’t officially employed by the local restaurant, but is occasionally given tips by its patrons. This year, Scott received $1,500 in tips. Scott has $76,500 income to report on Line 7 of his IRS Form 1040.
Scott paid $10,000 in qualified adoption expenses for an eligible child. His employer reimburses him for $4,000 of those expenses pursuant to the employer’s adoption assistance program. The $4,000 is reported in Box 12 (Code T) of Scott’s IRS Form W-2. After reviewing the instructions for IRS Form 8839, Qualified Adoption Expenses, Scott determines he can exclude all the adoption benefits from income. He doesn’t include the $4,000 on Line 7 of his IRS Form 1040.