A 2025 Form W-2 will report a worker’s wages, but the IRS has said it will not separately report qualified tips, and that qualified overtime will likely go unidentified as well. Anyone planning to claim the new deductions therefore has to rebuild the figures from other paperwork. The largest cap involved is $25,000, and every dollar of it has to be supportable from records the worker or an employer already holds.
What the IRS says a W-2 and a 1099 will leave blank
The statements come from IRS fact sheet FS-2026-05, published in March 2026 and now titled “What you will need to file your taxes under Working Families Tax Cuts”. For tips the wording is flat: “Forms W-2 and Forms 1099 will not separately report qualified tip amounts for 2025.” For overtime it is softer: qualified overtime amounts “will likely not be separately identified on 2025 Forms W-2.”
The gap between “will not” and “will likely not” is the agency’s own. A worker who earns tips can count on a form without a tip line. A worker with overtime may see something different, though the IRS is not promising it. Either way, the form that arrives in the mail or the payroll portal is not designed to hand over the deduction amount.
The deductions themselves are older than the reporting guidance. The fact sheet cited below on the working-Americans deductions, first published in July 2025 and updated July 25, 2025, says employers and other payers must file information returns and furnish statements, and that the IRS would provide transition relief for tax year 2025. The March 2026 sheet is the one that spells out what that means for the forms in hand: no tip line, and probably no overtime line.
A paper trail built from tip logs, point-of-sale summaries and pay stubs
Since the forms will not do the work, the same fact sheet lists what to gather. For tips, it names “daily or weekly tip logs, employer reports, point-of-sale summaries.” For overtime, it names pay stubs or payroll summaries showing overtime pay. A worker who changed jobs in 2025 needs the tip records from each employer, and a worker with more than one job needs the overtime records from each.
In household terms, this is a bookkeeping job that restaurants, salons and warehouses did not hand to their staff in the past. A bartender with a shoebox of cash-tip notes and a card-tip printout from the point-of-sale system has the material the IRS describes. A worker who never kept a log has to reconstruct the year from whatever the employer can print.
Where the reconstructed numbers land on Schedule 1-A
The new deductions are claimed on Schedule 1-A, which attaches to Form 1040, Form 1040-SR or Form 1040-NR. The fact sheet says the schedule’s line 38 total moves to line 13b of Form 1040. In its separate fact sheet on the new form, the IRS says the tips and overtime deductions require a Social Security number valid for employment for the taxpayer, the spouse or both, as the case may be.
That makes Schedule 1-A the place where a pile of logs turns into a single number. The deductions are temporary and apply for tax years 2025 through 2028,. Because the rules cover four tax years, records kept for 2025 describe a routine that repeats for three more filing seasons.
A $25,000 ceiling is not the same as an expected amount
The $25,000 figure is the cap on the tips deduction, according to the IRS’s fact sheet on the deductions for working Americans and seniors. The overtime deduction tops out at $12,500, or $25,000 on a joint return. Both begin to phase out when modified adjusted gross income passes $150,000, or $300,000 for joint filers. The fact sheet says the amounts are deductions, which lower taxable income. They are not payments.
A cap says nothing about any particular worker’s total. The figure that goes on the schedule is whatever the logs and payroll records support, up to the limit. A worker whose records show a few thousand dollars in tips deducts that, not $25,000. Married filers face one further condition on every one of these deductions: the fact sheet says a couple must file jointly to claim them.
Two weeks left on the extended deadline for a 2025 return
For a return filed on extension, the deadline is Thursday, October 15, 2026, which leaves 14 days from publication of this article. The IRS extension page, last updated September 20, 2026, gives October 15 as the extended filing date and adds that an extension applies only to filing the return, not to paying any tax due.
That timing matters for the paperwork. A filer waiting on a payroll department for a summary of overtime pay, or on a former employer for tip records, has until that date to assemble them, and the IRS fact sheet’s list of records is the checklist to work from. The IRS page on getting an extension is the agency’s source for the date.
Keeping a refund and its paperwork in one place
The IRS Refund Recovery Kit is written for taxpayers whose refund stalls, shrinks or fails to arrive after a return is filed. It addresses the practical problem of tracking which notice, date and status belongs to which return.
The IRS Refund Recovery Kit contains a 13-page kit and a refund status tracker spreadsheet with tabs for refund status and for notices and deadlines.
Log a 2025 return’s refund status and IRS notices in one tracker →
AI assisted in drafting this article, which was checked against the IRS pages linked above.
