As a server, does the law require that you declare 100% of your tip income? My employer has said to claim 10% of my sales (almost 100%) and I am just curious what the law is. I am not concerned with fudging, I just want to know if employer's have a say, or choose a standard, and what the IRS says.
2007-04-11 17:25:27 · 4 answers · asked by Mia 1 in Business & Finance ➔ Taxes ➔ United States
Yes you have to claim 100% of your tips, however, any tips totaling under $20 for the month are not subject to social security & medicare. If your tips are less that the average for the business you work for (probably the 10% of sales figure your employer gave you), you need to keep a record of your tips (a tip diary) for documentation if the IRS requests it.
2007-04-11 17:36:02 · answer #1 · answered by Amy F 3 · 1⤊ 0⤋
The law says that you have to claim 100% of your tips. Your employer is suggesting that you commit tax fraud by reporting less. The employer doesn't get to make the rules here, there's federal law that governs it.
2007-04-11 19:00:01 · answer #2 · answered by Judy 7 · 0⤊ 0⤋
Yep, you have to report 100% of your tips. Some companies allocate tips, and from what you have posted here, it looks like they allocate your tips as 10% of your sales.
Keep track of what you take in as tips on a nightly basis, and compare that to what is allocated. Usually, the allocated tips are more than the actual, anyway.
If your actual tips exceed the allocated tips by $20 in any month, you'll need to specify that on the tax return for the year.
It's late and I'm a little tired, so I hope this makes sense. ;)
2007-04-11 17:34:20 · answer #3 · answered by Peggy K 5 · 0⤊ 1⤋
8% of your total sales even if you don't make that much. That is what you have to claim.
2007-04-11 17:33:01 · answer #4 · answered by calired67 4 · 0⤊ 1⤋