Which statement about tip income is accurate?

The accurate statement about tip income is that the reported tips must be included as wages in box 1 of Form W-2. This reflects the Internal Revenue Service (IRS) guidelines that require employees who receive tips to report those earnings as part of their taxable income. Tips, whether in cash or through credit card transactions, are considered wages by the IRS and should be reported accurately to ensure proper taxation.

By including reported tips in box 1 of Form W-2, employers fulfill their obligation to document the total income that employees have received, which helps maintain transparency and compliance with tax laws. This requirement emphasizes the importance of accurately reporting all forms of income, contributing to the overall tax structure.

The other options provide misunderstandings about the reporting of tip income, such as the incorrect belief that certain employee categories or types of tips do not need to be reported to employers, which could result in tax compliance issues and misrepresentations of income for employees.