What is a Treasury Tipped Occupation Code (TTOC) and how do I apply it?
A Treasury Tipped Occupation Code (TTOC) is the IRS code that identifies the job an employee worked when they earned tips. Starting with tax year 2026, the IRS updated Form W-2 to hold up to two TTOCs in Box 14b, or 000 for an occupation that doesn't qualify for the no tax on tips deduction. Every employee who earned tips in 7shifts Payroll in 2026 needs at least a primary code, including employees you've since terminated, since they still receive a 2026 W-2. Adding a TTOC doesn't change how tips are taxed on paychecks. Earning codes still control tax withholding on tips.
- Primary TTOC: the tipped occupation where the employee earned the most tips.
- Secondary TTOC: a second tipped occupation, if the employee has one. Leave it set to "This employee does NOT receive tips/Not applicable" if they don't, and don't repeat the Primary code here.
Setting a TTOC for tipped employees
-
Go to Payroll > Employees.
- Click the pencil icon next to the employee's name.
- Click the For Employer tab.
- In the Employee tax declaration section, select the occupation where the employee earned the most tips from the Primary Treasury Tipped Occupation Code (TTOC) dropdown.
- Optional: if the employee earned tips in a second occupation, select it from the Secondary Treasury Tipped Occupation Code (TTOC) dropdown.
- Click Save.
Not sure which code fits? Check the IRS tipped occupations list and choose the one that matches the employee's role. For questions about how tips are taxed, contact a tax professional.
Example: matching codes to an employee's tipped work
Use this table as a quick reference for how to pick a Primary and Secondary TTOC based on where an employee earned their tips.
| Employee's tipped work | Primary TTOC | Secondary TTOC |
|---|---|---|
| Server only | 102 | 'This employee does NOT receive tips/Not Applicable' |
| Server and bartender, most tips as a server | 102 | 101 |
| Server and line cook, most tips as a server | 102 | 105 |
| Server, plus some tips in an occupation that isn't on the list | 102 | 000 - Tips received in a non-qualifying occupation |
| Three or more tipped occupations, all on the list | The occupation with the most tips | The occupation with the second-most tips |
Tips from an occupation that isn't on the list. If any tips were received in an occupation that doesn't qualify, enter 000 - Tips received in a non-qualifying occupation as one of the two codes. It can go in either the Primary or Secondary slot, but we recommend entering the qualifying occupation with the most tips as Primary and 000 as Secondary.
More than two tipped occupations. Enter codes for any two of the occupations where the employee received tips. We recommend using the two occupations where they earned the most.
What happens if a TTOC is missing or incorrect
A W-2 without a TTOC shows 000 in Box 14b, which tells the IRS the employee’s tips don’t qualify for the no tax on tips deduction, even if they earned tips. The employee can only claim it once a corrected W-2 (W-2c) shows the right code, and 7shifts generates that correction automatically if you update the TTOC after the W-2 is published.
Note: If any of an employee’s tips came from an occupation that doesn’t customarily and regularly receive tips, one of their two TTOCs must be 000.
Starting December 10, 7shifts checks every employee with tips:
- No tips earned: stays at “This employee does NOT receive tips/Not applicable.” Never flagged.
- Tips earned, no Primary TTOC set: EE is flagged as Needs attention. Their W-2 shows 000 until you add a code.
- Tips earned, a code already on file, including 000 if that’s correct: no action needed, not flagged.
The Secondary TTOC is always optional.
Important: Updating a TTOC after an employee’s W-2 is already published triggers a corrected W-2 (W-2c), and a per-amendment fee applies. See 7shifts Payroll: Additional Fees for more details.
Frequently asked questions about tipped occupation codes
Which code do I use if an employee worked two different tipped occupations?
Select the occupation where they earned the most tips as the Primary Treasury Tipped Occupation Code (TTOC), and the occupation where they earned the next-most as the Secondary Treasury Tipped Occupation Code (TTOC).
Will a missing TTOC block payroll?
No. A missing TTOC never blocks payroll. Starting December 10, 7shifts flags any employee with tips and a missing TTOC as Needs attention so you can go back and add one.
Can I change a TTOC after it's set?
Yes. Go to Payroll > Employees, select the employee, then select Edit. Under the Employer tab, update their Primary or Secondary Treasury Tipped Occupation Code (TTOC). If you make the change after the employee's W-2 has already been published, a corrected W-2 (W-2c) is automatically generated and a per-amendment fee applies. See 7shifts Payroll: Additional Fees for more details.
Does a TTOC carry over to the next tax year?
Yes. Once you set a primary or secondary Treasury Tipped Occupation Code (TTOC) for an employee, it remains in effect for subsequent tax years until you update it—you do not need to re-enter it each year.
Each Form W-2 reports whichever TTOC was active for the employee as of December 31 of that tax year. Any updates made during the year apply starting January 1 of the current calendar year forward (covering earlier payrolls run within the current year), but will not alter prior tax years.
Do terminated employees need a TTOC?
Yes. Any employee who earned tips in 2026 needs a TTOC on file, even if they no longer work for you, because they still receive a 2026 W-2.