I'm a server and I claim 100% of my tips. Will I get a refund come tax season or will I still owe more taxes?

Question

I've heard of a couple of servers actually paying big time come tax season, like a few thousand dollars. I assumed that the void checks I got every two weeks was the government taking my hourly $2.63 for taxes. I make average $200 a night in tips. Is it possible that I would still owe the government more on top of my $2.63/hour that I never see??

Answer 1

It depends on your gross income for the year . Lets say you work 50 weeks per year, 6 hours per night , 5 days per week . That is around 1500 hours per year . $2.63 x 1500 hours = $3945 . If you claim $200 per night, you have a gross of $50,000 per year .

If you use the tax brackets charts from the IRS, you may find the government wants to collect much much much more than $3,945.

I would say it is safe to say you will be paying the IRS some more money at the end of the year .

You will need to pay around 7.5 % for Social security, medicare, unemployment, plus around 14 - 18 % for federal tax. if you live in most states , you will have to pay another 5 % or so to the state income fund .

Answer 2

If you are reporting all of your tips to your employer, then they'll take tax out on the tips as well as on your base hourly amount. You don't say how many hours or nights you work a week, so there's no way to tell what your total income for the year is. If you are getting void checks, that sounds like your hourly rate isn't enough to cover the tax, very possible since such a large part of your income is tips, so it's probable you would owe when you file. If you'll post again giving your gross income and your withholding amount for federal income taxes year to date, and how much of the year you worked at this job, your filing status (single?) and whether you have any dependents, you can get a better answer.

Answer 3

Yes you will owe additional taxes.

When you report your tips to your employer, your employer withholds Social Security and Medicare taxes on your tips, in addition to income tax withholding. If the employer cannot withhold enough to cover the payroll taxes, you will pay the shortfall when you file your tax return.

Your $2.63 salary just about covers Social Security and Medicare taxes for the amount of tips you report. There is little or no salary left that can be used to pay your income taxes. You will pay those income taxes, plus any uncollected Social Security and Medicare taxes, when you file your tax return.

Answer 4

Type in "U.S. Government tax questions" into your Web Search.