Do you earn income from tips? You worked hard to make sure your customers got the best service possible, and it sure feels nice to earn a stack of money. You can’t hide your tip income from the IRS, however, even if you take home cash.
Tip income affects your taxes and you should report it correctly on your tax return. We have a few pointers to help you file correctly!
Don’t leave anything out. You must report all tips on your return. P.S. You probably don’t know that includes non-cash items such as tickets, passes or other items.
Pay your taxes. All tips you received during the year are taxable. Whether you received tips directly from customers or it was added to credit cards, you are going to be taxed. Don’t forget about your share of tips received from a tip-splitting agreement with other employees.
Tell the boss. You are required to report tips to your employer if you receive $20 or more in one month. By the 10th day of the next month, you must disclose cash, check and credit card tips so your employer can withhold federal income, Social Security and Medicare taxes.
Write it down. Keep a daily log to record your tips. This will make it easier to report the correct amount on your tax return. The IRS has a handy form to help you keep track.
Time is running out to file you taxes! Get started today with TaxSlayer to report your tips and all other income.