tips

A friend of mine reports his tips from waiting tables each year. This year however he reported more than what he actually got for his tips for the purpose of having high enough income to qualify for a mortgage loan. Can he undo this? What happens if next year he reports his real tips and it's of course a lot less than last year..Would he get audited?

He could “undo” what he did by filing an amended return showing the correct amount of tips. This is done by filing form 1040X. However, if he does this, the IRS MAY ask him about why he reported the higher number.

If he does not amend his return, reporting a lot less tips next year might trigger an audit, but probably won’t.

Please be aware that in signing the return, he swore, under the penalty of perjury, that the info on it was true and correct.