Tip Income

All tips are taxable and must be reported to the IRS. This includes cash tips received 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 you employer, unless the total is less than $20 per month per employer, 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 Income. 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.