Since workers have no guarantee of receiving one (gratuatity), or at times receive less than 15%, how is it they are taxed? What other countries place tax on tips, gifts/gratuaties?
Technically, is this legal?
2007-07-12 06:46:05 · 8 answers · asked by mr d 1 in Business & Finance ➔ Taxes ➔ United States
The IRS depends on you to honestly report your tips.
If your employer pools them for you, he may be reporting the amount.
They are taxed as income, no differently than salary.
Yes, legal.
2007-07-12 06:53:20 · answer #1 · answered by fcas80 7 · 1⤊ 0⤋
Yes, it is legal. Tips are considered as an addition to your income; therefore, it should be taxed. Your company has a policy where each position is taxed a certain percent. This percent is just an average. If you're happy about it, you can resign your position and look for something else to do.
2007-07-12 13:57:23 · answer #2 · answered by Mrs Apple 6 · 0⤊ 0⤋
As others have stated, tips are fully taxable. You should be recording your tips daily and reporting them monthly to your employer.
I've been involved with taxes for about 40 years and they've been taxable all of those years.
2007-07-12 14:20:23 · answer #3 · answered by Bostonian In MO 7 · 1⤊ 0⤋
Tips are defined as income per the IRS. Therefore, it's legal.
Waiters in other countries usually don't get tips.
2007-07-12 20:27:23 · answer #4 · answered by Steve 6 · 0⤊ 0⤋
Servers usually make only $3.43/hour from their employer, the rest of their income coming from tips. They have to claim a certain percentage of their tips to ensure that they are making over minimum wage. The tips are their income, and so are taxed just as if they are part of the employer's wage.
2007-07-12 13:55:25 · answer #5 · answered by whsswim 3 · 0⤊ 2⤋
In many other countries, tips are neither expected nor are they given.
Ask any waiter/waitress in the US how much they get when a group of Europeans come in.
2007-07-12 14:36:14 · answer #6 · answered by Wayne Z 7 · 1⤊ 0⤋
Don't know when.
Just one more way that our gov. has initiated "double taxation".
You paid tax on your income, you give tips from your net income, and the receiver pays tax again.
2007-07-12 13:51:33 · answer #7 · answered by ed 7 · 0⤊ 1⤋
All income in the US is all taxable unless it is specifically excluded.
Tip income is not excluded.
2007-07-12 14:11:00 · answer #8 · answered by Mark S 5 · 3⤊ 0⤋