If you work in an occupation where tips are part of your total compensation, you need to be aware of several facts relating to your federal income taxes:
• Tips are taxable – Tips are subject to federal income, social security, and Medicare taxes. The value of non-cash tips, such as tickets, passes, or other items of value, is also income and subject to taxation.
• Include tips on your tax return – You must include in gross income all cash tips received directly from customers, tips added to credit cards, and your share of any tips received under a tip-splitting arrangement with fellow employees.
• Report tips to your employer – If you receive $20 or more in tips in that month, you should Read More
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