TTOC Codes for Restaurant Workers: Reporting Tips on Your W-2
Tax Content Lead · 9/18/2026
TTOC codes for restaurant workers are Treasury Tipped Occupation Codes used to report tipped income on Form W-2, Box 14b; these codes are crucial for employers to allocate tips among employees.
Key takeaways
- TTOC codes categorize employees based on job duties and tipped income.
- Tips of $20+ per month must be reported to the employer.
- The No Tax on Tips deduction caps at $25,000 of qualified tips per year.
- Form 8027 is used by large food and beverage establishments to report tipped income and calculate employer tip liability.
What Are TTOC Codes for Restaurant Workers?
TTOC codes are used to categorize employees based on their job duties and tipped income. Employers report these codes in W-2 Box 14b to ensure accurate reporting of tipped income (IRS, 2024).
For example, a server would have a different TTOC code than a bartender, as their job duties and tipped income differ. It is essential for employees to check with their employer to determine the specific TTOC code used for their role.
How Do Restaurant Workers Get TTOC Codes?
Employers use TTOC codes to report tipped income on Form W-2, Box 14b. The codes are based on the employee's job duties and tipped income. According to the IRS, tips of $20+ per month per employer must be reported to the employer (IRS, 2024).
The employer will report the TTOC code and the tipped income in W-2 Box 14b. It is essential for employees to review their W-2 to ensure the correct TTOC code is reported.
What Forms and Line Numbers Use TTOC Codes?
Form W-2, Box 14b reports TTOC codes and tipped income. Form 8027 is used by large food and beverage establishments to report tipped income (IRS, 2024).
Form 8027 requires employers to report tipped income for employees who earn $20,000 or more in tipped income in a calendar year. The form is used to calculate the employer's tip liability.
Key Steps for Restaurant Workers and Employers
To ensure accurate reporting of tipped income, follow these key steps: Report tips of $20+ per month to the employer. Check the 'No Tax on Tips' deduction eligibility and claim it if qualified.
The No Tax on Tips deduction caps at $25,000 of qualified tips per year and phases out above $150,000 Modified Adjusted Gross Income (MAGI) for single filers and $300,000 MAGI for married filing jointly (IRS, 2024).
This deduction reduces federal income tax only and does not affect FICA (7.65%) liability on tips.
- Report tips of $20+ per month to the employer.
- Check the 'No Tax on Tips' deduction eligibility and claim it if qualified.
- Ensure accurate reporting of tipped income on Form W-2, Box 14b.
Key Takeaways
- Report tips of $20+ per month to the employer.
- TTOC codes are used to categorize employees based on their job duties and tipped income.
- The No Tax on Tips deduction caps at $25,000 of qualified tips per year.
What is the purpose of TTOC codes?
TTOC codes are used to report tipped income on Form W-2, Box 14b, and to ensure accurate allocation of tips among employees.
What is the deadline for reporting tips to the employer?
Tips of $20+ per month per employer must be reported to the employer by the end of the month following the month in which the tips were earned (IRS, 2024).
What is the purpose of Form 8027?
Form 8027 is used by large food and beverage establishments to report tipped income and to calculate the employer's tip liability.
| Form | Line Number | Description |
|---|---|---|
| W-2 | 14b | Reports TTOC codes and tipped income. |
| Form 8027 | Used by large food and beverage establishments to report tipped income. |
For a real-world example, let's say an employee earns $30,000 in gross wages and $20,000 in tips in a year. Their employer reports $20,000 in tips on their W-2, Box 14b, using the correct TTOC code.
The employee can then claim the 'No Tax on Tips' deduction on their tax return, reducing their federal income tax liability by up to $25,000.
It is essential to note that FICA (7.65%) liability still applies to tips, and the 'No Tax on Tips' deduction only reduces federal income tax liability.