I have a neighbor that works in a thrift store as a cashier for minimum wage. If her sales for the day top $350, she is given a 10% cash bonus of the overage, but when she receives her paycheck, they're on her paycheck under tips and taxed Is this legal for a retail establishment or is it tax fraud?
2007-02-04 14:24:09 · 11 answers · asked by workwanted 2 in Business & Finance ➔ Taxes ➔ United States
I, myself received a bonus from an employer, but it was a separate check, not taxed, and marked "bonus." I've been told that bonuses aren't taxable.
My neighbor's cash bonuses are being taxed under tips by a retail establishment, not a restaurant or hotel/motel.
2007-02-04 14:33:22 · update #1
My bonuses are taxed.
2007-02-06 18:21:06 · answer #1 · answered by ZenPenguin 7 · 0⤊ 0⤋
Bonuses and tips are both taxable income, and are taxed the same. The bonus would normally be reported as wages, not as tips, but it wouldn't be taxed any different by being taxed on the same line. She should talk to her employer though, so it gets reported on the right line next time. But it won't change her taxes.
2007-02-04 22:31:31 · answer #2 · answered by Judy 7 · 1⤊ 0⤋
No..it is all legal, that's why its showed on her check otherwise it will be hidden. Part of your W-2 will show tips as other income. Also, your friend's employer shows tips as income to eliminate capital gain tax which is a good thing.
Your " bonus " will be considered as " capital gain " and its taxed at 42%. ( about half of your check )
2007-02-11 11:02:45 · answer #3 · answered by MINH H 3 · 0⤊ 0⤋
Both bonuses and tips are taxable...Although it's probably wrong to put it under tips, it's probably an mistake of ignorance and not fraud.
2007-02-04 22:29:14 · answer #4 · answered by feanor 7 · 1⤊ 0⤋
Why wouldn't it be legal. The store, her employer, is paying her a bonus when sales exceeds a stated amount. When they pay her a bonus, it is taxable.
2007-02-04 22:30:32 · answer #5 · answered by jseah114 6 · 0⤊ 0⤋
Your thrift store is doing it correctly. Bonuses are taxable.
2007-02-12 21:12:52 · answer #6 · answered by Donald W 4 · 0⤊ 0⤋
Yes this is legal. Tips are a form of taxable income.
2007-02-04 22:29:03 · answer #7 · answered by skymocha 2 · 0⤊ 0⤋
Its income so shes better off with it as a withholding tax. otherwise, as with most tips she would be liable at the end of the year. when they reported the wages commisions
2007-02-04 22:29:19 · answer #8 · answered by atomic49er 3 · 0⤊ 0⤋
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2007-02-10 01:32:02 · answer #9 · answered by Anonymous · 0⤊ 0⤋
yes, it can be taxed under tips.
2007-02-12 21:41:38 · answer #10 · answered by susan q 4 · 0⤊ 0⤋