Tip Income

All tips are taxable and must be reported to the IRS, including cash tips you get directly from customers, tips from customers using credit cards, and the value of any non-cash tips such as tickets, passes, or other items of value.

As an employee who earns tips you have three responsibilities. You must

 

Keep a daily tip record so that you can accurately keep track of how much you earn in tip income.

Report tips to your employer if you earn more than $20 in tips during the month so that social security and Medicare tax can be withheld from your tip income.

Report all your tips on your income tax return, making sure to include everything you earned from tips in your gross income.

Use Form 4070 to report your tips to your employer every month, and then use Form 4137 to figure the social security and Medicare tax on any tip income you failed to report.

 

This entry was posted on Monday, July 2nd, 2018 at 6:14 pm and is filed under Using Priortax. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.