Page 1: Understanding Tips, Overtime, and Why They Matter
Do you get tips at work? Maybe you serve food, clean rooms, or help customers. Do you work overtime? That means you work more than 40 hours a week. These extra payments—tips and overtime—can really add up. But did you know they can also change how much tax you pay?
If you deduct tips and overtime – save big could be more than just a slogan. It could be real money in your pocket.
What Are Tips and Overtime?
Tips are money customers give you for good service. Servers, bartenders, hotel workers, and delivery drivers often get tips.
Overtime is extra pay you get for working more than 40 hours in a week. In most jobs, you get 1.5 times your usual pay. For example, if you make $10/hour, overtime pays $15/hour.
Why Are These Taxed?
The IRS (the people who collect taxes in the U.S.) sees tips and overtime as income. That means you have to pay taxes on them. But there are legal ways to lower your taxes using deductions.
If you learn how to deduct tips and overtime – save big becomes something real. It’s all about understanding what you can write off or subtract from your taxes.
Page 2: How to Deduct Tips and Overtime Legally
You can’t just say, “I don’t want to pay taxes on my tips or overtime.” You have to follow the rules. But there are ways to make your taxes lower if you plan right.
1. Keep Good Records
Write down every tip you earn—even cash tips. Use a notebook, app, or spreadsheet. For overtime, save your pay stubs or work logs.
If you don’t have records, it’s hard to prove your deductions. And if you can’t prove it, the IRS won’t let you use it.
2. Claim Work Expenses
If you earn tips, you probably spend money to do your job. You might buy uniforms, shoes, or pay for travel. These are work expenses. You may be able to deduct them if you itemize.
Let’s say you spent $300 last year on non-reimbursed work items. That’s $300 off your taxable income. It’s one way to deduct tips and overtime – save big without breaking any laws.
3. Use the Standard Deduction or Itemize
In 2025, the standard deduction is expected to be around:
- $14,000 for single people
- $28,000 for married couples
This amount gets subtracted from your total income. If your work expenses (plus other deductions like student loan interest or medical bills) are more than the standard deduction, you can choose to itemize instead.
Sometimes, when you itemize your deductions, you can deduct tips and overtime – save big compared to just using the standard deduction.
Page 3: Smart Tax Moves and Real Savings
Now let’s talk about real strategies to reduce your taxes even more.
1. Open a Retirement Account
If you put money into a Traditional IRA or 401(k), that money is not taxed until you retire. If you earn a lot in overtime or tips, this is a great way to save.
For example:
- You make $5,000 in tips and overtime
- You put $2,000 into a Traditional IRA
- You only pay taxes on $3,000
That’s another way to deduct tips and overtime – save big.
2. Use a Tax Professional
A tax pro or CPA (Certified Public Accountant) knows all the rules. They can help you find every deduction you qualify for, even the ones you might miss.
Some software programs like TurboTax or H&R Block help too, especially if you’re just starting out.
3. Track Mileage and Tools
If you use your car for work (like delivery or rideshare), keep track of miles. You can deduct 67 cents per mile in 2025 (this number can change). Also, deduct tools or gear you buy for your job.
Remember: Deduct tips and overtime – save big is not a trick. It’s about using real tax laws to keep more of what you earn.
Final Thoughts
You work hard. You earn extra through tips and overtime. You deserve to keep as much of that money as possible. When you deduct tips and overtime – save big, it means:
- Keeping records
- Knowing your expenses
- Using smart tax tools
- Getting help when needed
Whether you’re just starting your first job or working full-time with lots of overtime, these tips can help you pay less in taxes and save more for your future.
Let 2025 be the year you Deduct Tips and Overtime – Save Big.
