Tips..

 

Like the House bill, the Senate bill would give certain workers an above-the-line deduction for “qualified tips” and “qualified overtime compensation” included on an information return furnished to the individual or reported on a Form 4137 (for tips) for taxable years beginning after December 31, 2024, and ending for taxable years beginning after December 31, 2028.  

This means the deductions are proposed to be retroactive and proposed to apply to amounts paid even before enactment of the bill.  

Making this deduction available to the worker creates reporting and withholding obligations for the service recipient. 

In order to be deductible as qualified overtime compensation the payment must be overtime paid as required under section 7 of the Fair Labor Standards Act that is in excess of the regular rate (as used in that section) at which such individual is employed.

 Qualified overtime compensation does not include any amount treated as a qualified tip.