Is it legally required to report all tips on your 1040? Do employers keep track of an employee's tips?

Question

I will soon begin a part-time job hosting/waiter. Unlike my full time job, the bulk of my income on that job will come from tips. How do all of you handle this during tax season? Will my employer require that I let them know the total amount of tipis I make, even if I only claim a certain percentage? Do you have to report the entire amount on your 1040's? Thanks

Answer 1

I worked at a restaurant for 2 1/2 years as a waitress and they never taxed my tips or kept a record of them, nor did I report them myself. All restaurants are different though, and I know a lot will tax you on credit card tips but not on cash, it just depends. Are you SUPPOSED to report your tips? By law, yes. I'm not sure about the technicalities of it all, but for details you could probably ask your employer or contact your local H&R Block. If you don't report them though, I think you can rest assured that the big bad IRS isn't going to come chasing after you for a few hundred dollars or whatever. ;)

Answer 2

A good idea to avoid legal trouble, heavy fines and stuff is to report all income, no matter the source. The only exception is gifts, which can go up to a $10,000 value without being taxed. And, yes, report all tips to your employer so he'll at least have an accurate record. In Illinois, most employers have to make up anything that's under minimum wage.

Answer 3

Is there any way to find out where this person works? I mean, I'd never go there of course. Or at least I wouldn't spend any money, since that would just help the employer. but I could tip!

Answer 4

As a waitress for many years the IRS expects you to make at least 10% of you total sales. Do not claim more then that but always include all of the tips on Credit cards. You will be fine - it is also reccommended you keep track of you tips in a notebook - keep one with what you actually amde and one for what you claimed - and keep them seperate in case you get audited !

Answer 5

The employer will track only the tips left on a charge card....they will probably have you claim an amount everynight. Although illegal not to claim everything you take I don't know anyone that did

Answer 6

From the IRS website:

An employee who receives $20.00 or more in tips must report those tips in writing to their employer by the tenth day following the month in which the tips are received.

nternal Revenue Code section 6053 details the reporting of tips by both the employee and the employer. Internal Revenue Code section 6053(a) states that every employee, who in the course of their employment by an employer, receives in any calendar month tips which are wages, as defined in section 3121(a) or section 3401(a), or which are compensation as defined in section 3231(e), shall report all such tips.

Answer 7

Legally, they say you need to claim a certain percent (2-10%)whether you make that much in tips or not. i suggest you get your taxes done at h&r block, they know how to save you more money. and you dont need to keep track of every dollar. they base it on your total income. only claim what they want you to claim, not what you actually made. your employer dosent require any info like that. that money never goes in their hands so they dont need to kow anything. hope im helpin!!

Answer 8

I don't know about the states, but in Canada, taxation Canada assumes you are going to make about 10% of your gross earnings in tips, and expect you to claim that much. You could probably get away with less, as long as you claim the largest percentage of them.

Answer 9

yes all tips must be reported
with that said, most people receiving tips seem to for get just how much they received in tips come tax reporting time :-)

Answer 10

yes you have to report all earnings including tips, no your employer dose not keep a record of them