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Important Reminders about Tip Income

Important Reminders about Tip Income

IRS Tax Tip 2013-16

 

If your pay from your job includes tips, the IRS has a few important reminders about tip income:

  • Tips are taxable. Individuals must pay federal income tax on any tips they receive. The value of non-cash tips, such as tickets, passes or other items of value are also subject to income tax.
  • Include all tips on your return. You must include all tips that you receive during the year on your income tax return. This includes tips you received directly from customers, tips added to credit cards and your share of tips received under a tip-splitting agreement with other employees.
  • Report tips to your employer. If you receive $20 or more in cash tips in any one month, you must report your tips for that month to your employer. Your employer is required to withhold federal income, Social Security and Medicare taxes on the reported tips.
  • Keep a daily log of tips. You can use IRS Publication 1244, Employee's Daily Record of Tips and Report to Employer, to record your tips.

For more information, see IRS Publication 1244 or Publication 531, Reporting Tip Income. Both are available at IRS.gov or by calling 800-TAX-FORM
(800-829-3676).


Additional IRS Resources:

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Johnston February 22, 2013 at 01:49 PM
Hey David, I got a tip for you... Anytime -anyone- has a chance at finally getting over on the wasteful uncle sam and his machine they will do so. And aside from someone that works at the IRS, you won't find a single person on the planet that would argue otherwise. Furthermore shame on the IRS for investigating anyone in the category that receives tips... the bankers and politicians are driving the economy into the ground and getting away with it. What hypocrisy!

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