It’s that time of year again, you should have received your tax forms; and, this year you’ll have until April 17th to file with the IRS. As always, servers, bartenders, performers, and anyone else who receives tips on the job will have extra work to do in correctly reporting their income. Questions about how much of your income needs to be declared are easy to answer: All of it. We’ve all heard the myths and bad advice from others that servers can get away with reporting a fraction of the tip income they bring home, but this is simply not true. Keeping accurate records will make things much easier at tax time!
Employers should be aware that, according to the IRS, “employees who receive tips of $20 or more in a calendar month while working for you, are required to report to you the total amount of tips they receive. They must give you written reports by the tenth of the following month.” (IRS.gov). Check out the article, “Don’t Forget Uncle Sam When You’re Counting Your Tips,” for more information on how to keep track of your tips throughout the year, and how to report them at tax time.
Also, if you want to familiarize yourself with the basics of tip reporting, here’s an excellent article by The International Guild of Hospitality & Restaurant Managers titled, “8 Tips for Employers and Employees on Reporting Tips.” For more information on reporting to the IRS and filling out “Form 4070A – Employee’s Daily Record of Tips,” refer to IRS Publication 1244: Employee’s Daily Record of Tips and Report to Employer. When in doubt, always check with a tax professional to make sure you’re in compliance.
Have you starting working on your taxes yet?
- Topic 761 – Tips – Withholding and Reporting – IRS
- Don’t Forget Uncle Sam When You’re Counting Your Tips – Business Insider
- Eight Tips for Employers and Employees about Reporting Tips – The International Guild of Hospitality and Restaurant Managers
- IRS Publication 1244 – Employee’s Daily Record of Tips and Report to Employer
© 2012 National Hospitality Institute®, TAM® of Nevada