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The IRS has issued new guidelines regarding tax deductions for tips and overtime, but uncertainty remains among employers about their reporting responsibilities. AICPA is requesting further clarification and "safe harbor" protections for employers and employees concerning W-2 and other filings. Cheri Freeh, Chair of the AICPA Tax Executive Committee, emphasized the need for guidance, stating: “Employers and payors are unsure of how to satisfy information reporting required under section 224 and section 225.” The new tax deductions, part of the One Big Beautiful Bill Act, are set to last from 2025 to 2028, but complexities in implementation raise concerns for both employers and workers. The AICPA is advocating for safe harbor protections during this transition period.
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