Here’s a tip: if you get tips with your employment, that money is taxable
If you have a job in which you get tips, we hope you’re getting some good ones. We also want to tip you with this information…
Tip One: Show all tips on a tax return
Use form 4137 called Social Security and Medicare Tax on Unreported Tip Income. This is where you can report the amount of any unreported tip income, to be included as additional wages. Hint: This would also include the value of non-cash tips, like tickets, passes, etc.
Tip Two: All tips are taxable
Pay taxes on all the tips that you received during the 2016 year. This would include tips directly from customers, and also tips added to credit cards. It even includes the tips you received from a tip-splitting agreement that you had with other employees.
Tip Three: Report tips to an employer
If you receive $20 or more a month as an employee, you have to report your tips for that month to your employer on the 10th day of the next month. You would include cash, check and credit card tips that you received. Your employer will then withhold federal income, Social Security, and Medicare taxes.
Tip Four: Keep an everyday log of tips
You can use Publication 1244 called “Employee’s Daily record of Tips and Report to Employer” in order to record these tips. Then you can report the correct amount of tips on your tax return.
Well, we know this wasn’t 20% +, but at least these tips will help you on your tax return.
