Today is Common Courtesy Day

tips in a jarDo you earn tips as a part of your job? If so, you’re a fan of “Common Courtesy Day”. Here are some IRS tips on how taxes apply to tip income:

Important Reminders about Tip Income

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.

Source

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About HR Strategies

HR Strategies is a private human resource management firm created to enable small business owners to focus on their core competencies, rather than the tedium of running payroll, providing employee benefits, or the many other facets of human resource administration. We allow business owners to concentrate on their passion, without being distracted by countless human resource responsibilities.

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