Your Tip Earnings And Taxes

Your Tip Earnings and Taxes
If you​ work in​ a​ service where you​ get tips,​ guess what? the​ IRS expects you​ to​ report them and pay taxes on​ them .​
Your Tip Earnings and Taxes
The internal revenue service takes a​ very simple approach to​ tips .​
It views all tips you​ make in​ your job as​ taxable income that must be reported and for which taxes must be paid .​
Put another way,​ the​ IRS has a​ simple but brutal view towards taxes
Now tips come in​ different forms .​
Some are received directly from customers while others are automatically added to​ the​ customer’s bill .​
The IRS takes the​ position you​ must report and pay taxes on​ both amounts .​
This also includes taxes you​ earn through any group splitting where all tips are collected together and then split amongst the​ employees .​
On top of​ this,​ the​ IRS also takes the​ view that any non-cash tips such as​ tickets to​ something are also income that should be reported and taxes paid on​ .​
Put another way,​ the​ internal revenue services gets you​ coming and going .​
To make things a​ little more brutal,​ the​ internal revenue service requires you​ to​ take some steps in​ reporting tips .​
If your tips total $20 or​ more in​ any calendar month from a​ single job,​ you​ are supposed to​ report the​ total to​ the​ employer by the​ 10th day of​ the​ next month .​
The employer is​ then supposed to​ withhold federal income tax,​ social security and Medicare taxes from your paycheck .​
Keep in​ mind that the​ failure to​ do so can lead to​ the​ placement of​ a​ 50 percent penalty on​ your taxes .​
Obviously,​ the​ IRS is​ fairly serious about getting its money .​
Tips paid to​ waitresses,​ bartenders,​ barbacks and so on​ are a​ hot spot with the​ IRS and always have .​
Since tips tend to​ be given in​ cash form,​ the​ potential for forgetting to​ report them is​ particularly high .​
The IRS seems to​ think so and has shown a​ generally aggressive attitude on​ the​ subject .​
If you​ indicate you​ are a​ waitress or​ bartender on​ your tax return,​ but fail to​ report any tip income,​ it​ could be audit time.
Your Tip Earnings And Taxes Your Tip Earnings And Taxes Reviewed by Henda Yesti on July 08, 2018 Rating: 5

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