If you’re an employee that gets tips as part of your income, do you know the rules regarding taxes? What if you’re an employer, do you know how to calculate for tips your employee has received?
Tips need to be reported when you’ve made more than $20 in a month. Not reporting your tips is cheating on your taxes!
You have to pay taxes on your tips, because this is considered part of your income. Those tips add up, so if you’re over the limit, start adding! That includes waitresses, bartenders, spa employees, hairdressers, barbers, golf caddies, cleaning services, taxi drivers, bell hops, pizza delivery people, doormen, casino employees…and YOU if you receive tips! There are many other jobs that receive tips as part of their income, and you know who you are. Are you reporting your income properly? It doesn’t matter if you’re getting tips from customers, or from other employees where you work, it’s time to start reporting your tips!
Another important tip on tips is to keep a daily record. It’s your responsibility, and now you know!
You can find publications regarding tip reporting at the IRS. (IRS.gov)
Look into publications 531 and 1244. They’ll help you understand and keep better records.
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