We were having a talk about weather or not you had to claim all or 50% of your pay as far as tips. Cause if you work at like Pizza Hut you only have to claim your tips if they are 50% of your pay.
2006-10-14 01:21:09 · 3 answers · asked by A D 2 in Business & Finance ➔ Taxes ➔ United States
That's malarkey. The IRS wants to know about every cent you make, whether tips or salary or winnings at poker. It's all income, as far as they are concerned.
2006-10-14 02:07:02 · answer #1 · answered by Larry Powers 3 · 1⤊ 0⤋
You are supposed to report all of your income, whether or not anyone else tells the IRS about it. It is a voluntary compliance system, and it's down to you to get the amount correct.
If your boss gives you a small tip here and there as a holiday thank-you for a job well done, this is supposed to be included in your W2 from your employer, and if not, you add it yourself as "tips" on your tax return.
You need not make an assumption that 1/2 of your wages are tips, however. The assumption that a percentage of income is automatically treated as tips is limited to the restaurant industry. Many other industries also operate on tips (taxis, hairdressers, etc.); these people all have a personal responsibility to list and report the income.
2006-10-14 02:32:43 · answer #2 · answered by lizzit 3 · 1⤊ 0⤋
As the previous answer stated, every penny you received as tip is supposed to be reported. In reality no one does. So in the restaurant business, IRS "enforce" around 8% of the gross sale to be tip income. And restaurant owners allocate that 8% to its workers, usually based on the hours each person work. This allocated tip income shows in box 8 of W-2.
IRS hasn't make the same enforcement for hospitality (hotel etc) businesses yet.
Best wishes.
2006-10-14 07:06:05 · answer #3 · answered by JQT 6 · 1⤊ 0⤋