Can’t claim tips without a 1099

[Opus 17]

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@Sbrown140 wrote:

So basically all uber drivers like me who made less than 20k and are not issued official 1099 for tips are all excluded from deducting tips?I made over 10k of my total income in tips last year and according to you all on this thread im **bleep** outta luck?

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Someone else said that Uber drivers can request a 1099-K even if it is not mandatory.  (But I don't if they will send you a late 2025 document now.)  Uber also seems to know that you can't claim the deduction without a 1099, read their page carefully.

https://help.uber.com/en/driving-and-delivering/article/get-tax-forms-from-uber?nodeId=084856a7-da35...

You can also self-report tips on form 4137. The problem here is that form is designed for tipped workers who did not report their tips to their employer.  I don't know if that form can be used with self-employment.

This Turbotax article also has, I believe, incorrect information that you can deduct tips from self-employment without a 1099.  I have flagged it for review.  Note that the people who write the articles are not the same tax experts who verify the programming.  The programming must be verified in accordance with IRS regulations, and the IRS will not accept any return that doesn't match all the regulations.  So if there is no procedure in the program, I would take that over the article.  Sometimes the IRS issues exceptions but I have not seen an exception for this issue. 

https://turbotax.intuit.com/tax-tips/tax-deductions-and-credits/no-tax-on-tips-how-it-works-in-the-o...

As a practical matter, if you don't have a 1099-K, then whatever you report as Uber income is entirely on the honor system.  If your gross income was $10,000 and $1,000 was tips, there is very little chance the IRS would audit you if you self-reported $9,000 of gross income, which would achieve the same result.  However, if they audited you, your Uber records would clearly show what you did, and you would owe back taxes and possibly interest and penalties of about 1% per month of the underpaid taxes.  

[Opus 17]

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@Sbrown140 wrote:

Dave,i am using TT self employed,when i check the box that says is any of your income from tips yes,it states that i cannot take the deduction at this time but to check back for an update,so basically it will not allow the deduction.

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The question (which you can't answer, I guess) is whether the interview would work if you had a 1099 first.  I'm trying to have it looked into. 

[dmertz]

The way I interpret the instructions for Form 4137, I don't see how Form 4173 could be used by a sole proprietor:

Use Form 4137 only to figure the social security and Medicare tax owed on tips you didn’t report to your
employer, ...

I don't see how a a sole proprietor (someone who is treated as both employee and employer) can both know and not know that there are such tips.  If in their role as employer they claim to not know that they received tips by not including them on Schedule C, they can't then take the opposite position on Form 4173 in their role as employee and claim to know that there are such tips.  It would seems to be a form of estoppel.

Regarding TurboTax's message about not being able to take the deduction at this time, it refers to a possible future change in the tax laws, not anything under Intuit's control.

[jonmerwin]

What's frustrating as a sole proprietor is that the tips ARE reported to the IRS on Schedule SE so they should be able to be deducted on Schedule 1A