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IRS Taxes Tips For Tippers

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Reliance Tax Group
Reliance Tax Group

Tips are also considered taxable income. The employees that receive tips, such as waitresses or hair stylists, are expected to report and pay taxes on their tips. Here are 10 tax tips about tips:

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Did you know that tips are considered taxable income? Employees that receive tips, such as waitresses or hair stylists, are expected to report and pay taxes on their tips. Here are 10 tax tips about tips: * IRS Taxes Tips For Tippers
*Tips are to be retained by the employee and cant be taken by the employer. *
*Employees (like waiters, bartenders and bus boys) who regularly receive tips can pool their tips. But chefs, dishwashers and management cannot do the same. *
*Chefs, dishwashers and management can only receive a portion of mandatory service charges. These are not considered tips so can be distributed as the employer sees fit. *
*Employees must claim all tips as income. This includes tips the employer pays over to employees from customers, in addition to the tips employees received from customers directly. *
*Even though employees receive tips from customers, they are generally subject to withholding by the employer. *
*Employees report tip income on Form 4070, Employees Report of Tips to Employer. *
*Employers must collect income tax, employee Social Security tax and employee Medicare tax on tips reported by employees. Employers may collect these taxes from an employees wages to allow for tip income. *
* Source: Wood, Robert W. IRS Taxes Tips for Jesus. Forbes. Forbes.com LLC, 6 January 2015. Web. 24 September 2015. < http://www.forbes.com/sites/robertwood/2015/01/06/big- winner-of-4000-tips-for-jesus-irs/>

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IRS Taxes Tips For Tippers

  • 1. Did you know that tips are considered taxable income? Employees that receive tips, such as waitresses or hair stylists, are expected to report and pay taxes on their tips. Here are 10 tax tips about tips: * IRS Taxes Tips For Tippers
  • 2. *Tips are to be retained by the employee and cant be taken by the employer. *
  • 3. *Employees (like waiters, bartenders and bus boys) who regularly receive tips can pool their tips. But chefs, dishwashers and management cannot do the same. *
  • 4. *Chefs, dishwashers and management can only receive a portion of mandatory service charges. These are not considered tips so can be distributed as the employer sees fit. *
  • 5. *Employees must claim all tips as income. This includes tips the employer pays over to employees from customers, in addition to the tips employees received from customers directly. *
  • 6. *Even though employees receive tips from customers, they are generally subject to withholding by the employer. *
  • 7. *Employees report tip income on Form 4070, Employees Report of Tips to Employer. *
  • 8. *Employers must collect income tax, employee Social Security tax and employee Medicare tax on tips reported by employees. Employers may collect these taxes from an employees wages to allow for tip income. *
  • 9. * Source: Wood, Robert W. IRS Taxes Tips for Jesus. Forbes. Forbes.com LLC, 6 January 2015. Web. 24 September 2015. < http://www.forbes.com/sites/robertwood/2015/01/06/big- winner-of-4000-tips-for-jesus-irs/>