Code TP: Tip-Sharing, Charged Tips and Service Charges
Code TP is the cash tips the employee reported to you (W-2/W-3 instructions). For the no-tax-on-tips rules, “cash tips” means tips paid in cash or by card, and tips received in a tip-sharing arrangement (IRS: One Big Beautiful Bill provisions).
- Count: cash tips, charged tips, tip share received.
- Subtract: tip share the employee paid out to others.
- Leave out: mandatory service charges and auto-gratuities — they're wages.
- Don't cap: report the full amount even above $25,000; the cap applies to the employee's deduction, not to code TP.
Example
| Employee | Box 12 code TP | Box 14b |
|---|---|---|
| Sam | $1,350.00 | 101 |
| Rosa | $1,055.00 | 102, 104 |
| Lee | $150.00 | 104 |
Last reviewed 2026-10-28. General information, not tax advice. Your tax adviser can tell you what applies to you.