Form 1040
Claiming tips and overtime on Schedule 1-A
Schedule 1-A is the form the two deductions are claimed on. Part II handles tips, Part III handles overtime, and both follow the same shape.
Schedule 1-A, “Additional Deductions”, was introduced for tax year 2025. It carries four separate deductions; the two covered here are Part II and Part III. The total from Part VI flows onto Form 1040 line 13b.
Part I is where you establish your modified adjusted gross income. For most people that is simply Form 1040 line 11b, with adjustments only if you have excluded foreign or Puerto Rico income.
Part II — qualified tips
| Line 4c | Qualified tips you received as an employee |
|---|---|
| Line 5 | Qualified tips from a trade or business, capped at its net profit |
| Line 6 | Add lines 4c and 5 |
| Line 7 | The smaller of line 6 or $25,000 |
| Line 8 | Your MAGI, from Part I line 3 |
| Line 9 | $150,000, or $300,000 filing jointly |
| Line 10 | Subtract line 9 from line 8. Zero or less means no phase-out |
| Line 11 | Divide line 10 by $1,000 and round DOWN to a whole number |
| Line 12 | Multiply line 11 by $100 |
| Line 13 | Subtract line 12 from line 7 — your tip deduction |
Part III — qualified overtime
| Line 14a | Qualified overtime from Form W-2 (box 12, code TT for 2026) |
|---|---|
| Line 14b | Qualified overtime from Form 1099-NEC or 1099-MISC |
| Line 14c | Add lines 14a and 14b |
| Line 15 | The smaller of line 14c or $12,500 ($25,000 filing jointly) |
| Line 16 | Your MAGI, from Part I line 3 |
| Line 17 | $150,000, or $300,000 filing jointly |
| Line 18 | Subtract line 17 from line 16 |
| Line 19 | Divide line 18 by $1,000 and round DOWN to a whole number |
| Line 20 | Multiply line 19 by $100 |
| Line 21 | Subtract line 20 from line 15 — your overtime deduction |
Requirements that apply to both parts
- You need a Social Security number valid for employment. An ITIN does not qualify.
- If you are married you must file jointly. Filing separately disqualifies you from both deductions.
- Both are available whether you itemise or take the standard deduction.
Where the figures come from
For tax year 2026 onward your employer reports them separately on your W-2 — see the new W-2 boxes. For 2025 there was no separate reporting requirement, and taxpayers used the substantiation methods in IRS Notice 2025-69 instead.
To see what the numbers are worth before you fill anything in, use the tip calculator or the overtime calculator.
Source: IRS Schedule 1-A (Form 1040), 2025 · last reviewed