Jan 28th
How to figure out tax on tips as a waitress?
- Posted in Taxes Q&A
- Comments 6
I work at casino and we are in some irs thing where they assume we make 10 an hour in tips and that’s all we have to pay taxes on but those taxes are not taken out of our paycheck so I actually have two questions. 1can i force my employer to tax my assumed tips on my paycheck? 2 if i can’t how do i figure how a good estimate of what i will owe when i do my taxes?
You must keep daily record of tips, report tips to your employer and report on your tax return.
You have to keep a record of the tips you earn during your shift.
The IRS has a record book you can pick up at a local office or you may be able to order online.
It will come in handy at tax time to figure taxes on your actual tips.
If your tips exceed the $10/hr.,you can just report tips at $10/hr.
Did they tell you which program you are on? ATIP, TRDA and TRAC all work differently.
Do you have a sample paystub you are willing to share with us? Usually tips are added in, fica/mc/withholding is calculated, the tips are subtracted out and your paycheck is done.
Good places who may wants to help their employees, they add the tip in the w2 particularly in box 8. The following is the IRS guideline for tips and reporting:
This chapter is for employees who receive tips.
All tips you receive are income and are subject to federal income tax. You must include in gross income all tips you receive directly, charged tips paid to you by your employer, and your share of any tips you receive under a tip-splitting or tip-pooling arrangement.
The value of noncash tips, such as tickets, passes, or other items of value are also income and subject to tax.
Reporting your tip income correctly is not difficult. You must do three things.
Keep a daily tip record.
Report tips to your employer.
Report all your tips on your income tax return.
Check this out: http://www.irs.gov/publications/p17/ch06.html
You don’t want to estimate or assume your tips. That could cause overpayment or underpayment of taxes due. You want to keep an accurate record of your tips. That way, if you don’t make the $10 an hour, you may have enough proof to pay less tax. You don’t want to force your employer to do anything. Set about 17% of your tips aside for taxes. I believe you have to make quarterly payments to the IRS on your income. That way, you don’t have to send them a check for $3000 for taxes due at filing time + penalties for underpayment of estimated taxes. You can estimate taxes due because you have no tax tables yet. But don’t estimate your tip income – count it. Check with http://www.irs.gov.
large employers are required to allocate tips and this will vary by the type of employer
they do withhold taxes on the reported tips