Report Tips As Income

Lake Elsinore CPA would like to remind tax payers who receive tips as part of their wages, that if you collect more than $20 in tips a month, they need to be reported to your employer so federal income, Social Security and Medicare taxes can be withheld.

The IRS offers a form, Publication1244, to help you keep track of your daily tips to report to your employer. Tips can be defined as cash, additions to credit cards, any shared tip with fellow employees, and the value of any item given. The amount of tips earned will need to be retorted on your taxes as gross income.