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April 21, 2026
Question

Non-Qualified Tips not included on Line 2 of Quarterly 941 Report

  • April 21, 2026
  • 2 replies
  • 74 views

Created a non-qualified tips payroll item to separate gratuity from qualified tips to more easily assist client employees for the No Tax On Tips deduction for my restaurant clients. When preparing the 1st quarter 941 report I noticed that the non-qualified tips payroll item was not included on Line 2 wages, tips, and other compensation on the 941. It is included on Line 5b (SS tips) and 5c (medicare wages & tips). 

 

Reviewing the payroll item via Edit Payroll Item I can confirm that the non-qualified tips tax tracking type was selected (which mentions will increase line 2 on the 941) and that all payroll tax items are selected. On the payroll summary I double selected the federal withholding item and confirmed the non-qualified tips is included in the subject to income tax. 

 

I understand that override exists, however I don't want to run into this issue when completing the W-2. It will be a nightmare to correct with how many employees there are. Unsure why the non-qualified tips payroll item is not being reported correctly on the 941. Has anyone else experienced this? How did you get this resolved? 

2 replies

QuickBooks Team
April 21, 2026

I understand your concern regarding the reporting of non-qualified tips on Line 2, TheOnlyHawkman. Please also ensure that your QuickBooks Desktop is updated to the latest version before filing your Form 941.

 

If the issue persists even after updating, I recommend reaching out to our Live Payroll Support team during their available hours. So they can take a closer look and help determine what’s causing this behavior and offer an appropriate resolution.

 

Feel free to add a reply below if you have other concerns.

BigRedConsulting
Level 15
April 22, 2026

I tried setting this up as a test and see the same thing: Non-qualified tips don't appear anywhere on the 941 form or the Excel-based 941 payroll tax report, or on the Excel-based W-2 tax report.

 

It seems Intuit hasn't yet updated the forms and reports to include Non-qualified tips. That's rather surprising for the 941, which is now due.