You can subtract up to $25,000 of reported tips from your income if you file single or jointly with a Social Security Number and don't work in certain excluded jobs. Detailed Answer: Taxpayers who receive qualified tips (cash or charged), as reported on W-2 or 1099 forms, may deduct up to $25,000 annually on their federal tax return. This deduction specifically applies to joint filers with valid Social Security Numbers (SSNs), excluding those working in certain Specified Service Trades or Businesses (SSTB). The deduction phases out starting at $150,000 modified AGI for individuals and $300,000 for joint filers. Employers must report tips and the employee’s occupation for eligibility verification. This deduction applies regardless of whether you itemize or use the standard deduction.