A deduction is allowed for reported qualified tips
What the document says“There shall be allowed as a deduction an amount equal to the qualified tips received during the taxable year that are included on statements furnished to the individual”
The section adds a new section 224 to part VII of subchapter B of chapter 1 of the Internal Revenue Code of 1986, redesignating the old section 224 as section 225. It allows a deduction equal to the qualified tips received in the taxable year that appear on statements furnished under section 6041(d)(3), 6041A(e)(3), 6050W(f)(2) or 6051(a)(18), or that the taxpayer reports on Form 4137 or a successor.
What the document actually says“There shall be allowed as a deduction an amount equal to the qualified tips received during the taxable year that are included on statements furnished to the individual”
A worker may deduct the tips taken in that year. The tips must appear on a statement given to the worker.
Tips the worker reports on a set form also count. A deduction lowers the income that is taxed. Four kinds of statement are named.
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