Guides / Filing Taxes the First Time

By NorseHorse. Updated October 16, 2026. General information, not tax advice; confirm your situation with a tax professional.

Your first federal return for tax year 2026 is a Form 1040, due April 15, 2027. If your income is modest and comes from one or two W-2 jobs, you can likely file it for free. Your 2026 W-2 is also the first one with a box for the tips you reported to your employer (box 12, code TP), and that number is where the new tips deduction starts.

Do you have to file?

The income levels that require a 2026 return aren't in a final IRS publication yet: as of October 2026, Publication 501 and the Form 1040 instructions on irs.gov (including the draft instructions) are the 2025 editions. Check them when they come out. Some rules apply at any income, and these are the ones that catch tipped workers (from the 2025 Publication 501):

• You had net earnings from self-employment of at least $400, for example from delivery apps or private bartending gigs.
• You owe Social Security or Medicare tax on tips you didn't report to your employer.
• Advance payments of the premium tax credit were made for marketplace health insurance for you, your spouse or a dependent.

Even if you don't have to file, file if you can get money back, such as federal income tax withheld from your paychecks. All tips you receive are income subject to federal income tax, including cash tips and months under $20.

What to gather

• A W-2 from every employer. Employers have until February 1, 2027 to give you your 2026 W-2. New for 2026: box 12 code TP shows the cash tips you reported to your employer, code TT shows qualified overtime, and box 14b shows your Treasury Tipped Occupation Code. Box 8 shows allocated tips, which are not in box 1. If box 12 has codes A and B, your pay wasn't enough for your employer to collect all the Social Security and Medicare tax on your tips.
• Any 1099s. For 2026, a business or platform files Form 1099-NEC if it paid you $2,000 or more as an independent contractor in the course of its business (personal payments aren't reportable). January 31, 2027 is a Sunday, so your copy is due by February 1, 2027. Payment apps and marketplaces send a Form 1099-K when payments for goods or services total over $20,000 in more than 200 transactions. You must report the income whether or not a form arrives.
• Your own tip record. A daily log of cash tips, card tips and what you tipped out to others. It's how you check your W-2 and back up any tips you have to add yourself. Cashout logs each shift's tips, tip-outs, hours and mileage if you want that record in one place.
• Form 4137 if needed. If you got $20 or more in tips in a month from one job and didn't report all of it to your employer, you figure the Social Security and Medicare tax on the unreported part on Form 4137. You also use it for allocated tips in box 8. See Form 4137 for unreported tips.

Free ways to file

• IRS Free File: guided tax software from IRS partners. The IRS page currently lists it for adjusted gross income (AGI) of $89,000 or less. Free File Fillable Forms work at any income, but you fill in the forms yourself. Free File only handles the current year's return.
• VITA: free in-person tax preparation, generally for people who make about $70,244 or less. Use the VITA/TCE locator on irs.gov or call 800-906-9887.

The tips and overtime deductions

For 2025 through 2028 you can deduct up to $25,000 of qualified tips on Schedule 1-A, the new schedule you attach to Form 1040 for these deductions. Qualified tips are voluntary cash or charged tips, including shared tips, in an occupation the IRS lists as customarily receiving tips on or before December 31, 2024. Servers and bartenders are on it.

• On the draft 2026 Schedule 1-A you enter, for each employer, the tips from box 12 code TP or the tips on Form 4137 line 1 column (c), whichever is larger.
• It phases out above $150,000 of modified adjusted gross income ($300,000 joint).
• You need a valid Social Security number, and if you're married you must file jointly.
• You get it whether you itemize or take the standard deduction, which is $16,100 for a single filer in 2026.

Overtime gets a separate deduction in Part III of the same schedule, from box 12 code TT. See no tax on overtime and how to claim no tax on tips.

Worked example

You're single and had one serving job in 2026. Box 1 of your W-2 shows $45,000, and box 12 code TP shows $20,000.

Compare that with the federal income tax withheld in box 2. More withheld means a refund, less means you owe. The tip tax calculator runs your own numbers.

State returns

If your state taxes wages, you file a state return too, under that state's rules. States decide for themselves whether to follow the federal tips and overtime deductions. Alabama, for example, wrote its own overtime premium deduction for 2026 through 2028, capped at $1,000. The No Tax on Tips calculator shows your state's 2026 treatment of tips.

The deadline, extensions and what happens if you owe

Individual returns are due April 15, moved to the next business day if the 15th lands on a weekend or holiday. April 15, 2027 is a Thursday, so that's your date. You can get until October 15 to file with Form 4868, through Free File (no income limit for extensions), or by paying electronically and marking the payment as an extension. The extension is for filing only. Pay what you owe by the April date.

File on time even if you can't pay. The failure to file penalty is 5 percent of the unpaid tax for each month or part of a month the return is late, up to 25 percent. The failure to pay penalty is 0.5 percent a month, and it drops to 0.25 percent during an approved payment plan if you filed on time.

Common questions

Do I have to file taxes if I only made tips?

Tips are income, so they count the same as wages. Whether you must file depends on the 2026 income levels, which aren't in a final IRS publication yet, but you must file at any income if you owe Social Security or Medicare tax on tips you didn't report to your employer.

Can I file my taxes for free?

Probably. IRS Free File is listed for AGI of $89,000 or less, Free File Fillable Forms work at any income, and VITA sites prepare returns for free for people making about $70,244 or less.

Do I report cash tips my employer doesn't know about?

Yes. All tips are income. If you got $20 or more in a month from one job and didn't report it all to your employer, Form 4137 figures the Social Security and Medicare tax you owe on the rest. Not reporting tips to your employer can bring a penalty of 50 percent of that tax. The server tax guide covers the reporting rules.

What if I can't pay by April 15, 2027?

File anyway, pay what you can and ask for a payment plan. An extension doesn't push back the payment date.

Track it all with Cashout. Shifts, tips, unpaid breaks, taxes, and mileage, logged in seconds. iPhone · Android