At a Glance
Starting with the 2026 tax year, cash tips paid to nonemployees get dedicated reporting boxes: box 13a on Form 1099-MISC, box 1b on Form 1099-NEC, and box 1c on Form 1099-K. Each is paired with a Treasury Tipped Occupation Code (TTOC) field identifying the occupation(s) the tips were earned in. The tip amounts are breakouts — they stay included in the form’s main compensation box (box 3, box 1a, and box 1a respectively).
What Changed
Through tax year 2025, tips paid to independent contractors and other nonemployees were folded into general compensation totals on information returns, with no separate visibility. Beginning with the 2026 form revisions, the IRS breaks cash tips out into their own boxes on three forms: the 1099-MISC, the 1099-NEC, and the 1099-K.
In each case, cash tips include tips paid in cash or charged by customers, and the amount reported in the tip box is also included in the form's main total — the new boxes identify how much of that total was tips, they don't add to it.
Which Form Reports the Tips?
| Form | Tip Box | TTOC Box | The Tips Are Included In | Typical Filer |
|---|---|---|---|---|
| 1099-NEC | 1b | 1c | Box 1a (nonemployee compensation) | Businesses paying independent contractors whose compensation includes tips |
| 1099-MISC | 13a | 13b | Box 3 (other income) | Payers reporting tip-inclusive amounts as miscellaneous information |
| 1099-K | 1c | 1d | Box 1a (gross amount) | Payment settlement entities and third-party settlement organizations whose settled transactions include tips |
Tips paid to your own W-2 employees continue to run through payroll reporting — the new 1099 boxes cover payees who are not employees. If you run a restaurant or food-service business, see our restaurant tip reporting guide for the employee side.
The Treasury Tipped Occupation Code (TTOC)
Every tip box is paired with a TTOC field that identifies the occupation(s) the tips were received in. The completion rules are the same on all three forms:
- Enter up to two codes, based on the occupation(s) the tips were received in.
- If the payee received tips in more than two occupations, enter the codes for any two of them.
- If any tips were received in a nonqualifying occupation, “000” must be entered as one of the codes.
- The official code list is published at IRS.gov/TTOC.
Practically, this means payers need to know their tipped payees' occupations before filing season — a new data point most accounts payable and vendor systems haven't historically captured. Collecting it alongside the W-9 during onboarding is the natural fix.
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How to Prepare
- Identify tipped payees. Flag contractors and payees whose compensation includes customer tips (service industries, hospitality, delivery, personal services).
- Start tracking tips separately. The tip amount must be separable from total compensation at year-end. If your systems only store one total per payee, add a tip subtotal now.
- Collect occupation codes. Determine the TTOC for each tipped payee from the IRS list, and remember the “000” rule for nonqualifying occupations.
- Update your filing pipeline. BoomTax supports the new boxes across manual entry, spreadsheet import, and bulk upload — including an extended FIRE 1220 layout for systems that generate legacy flat files.
Frequently Asked Questions
No. On all three forms the tip amount is a breakout of a total that's still reported where it always was — box 1a on the 1099-NEC and 1099-K, box 3 on the 1099-MISC. The tip box tells the IRS and the payee how much of that total was cash tips.
Per the IRS instructions, cash tips include tips paid in cash or charged by customers — so tips added to a card payment count as cash tips for these boxes.
The TTOC field holds up to two codes. If tips were received in more than two occupations, the IRS instructions say to include the codes for any two of them. If any tips came from a nonqualifying occupation, "000" must be one of the codes you enter.
These boxes are on information returns for nonemployees and settled transactions. Employee tips continue to be reported through payroll on the W-2. See our restaurant tip reporting guide for employee-side rules.
Related Guides
Author
Ken Ham
Founder at BoomTax
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Passionate about making tax compliance simple so businesses can focus on what matters.
BoomTax and its affiliates do not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors prior to engaging in any transaction.
