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Are tips taxed differently than wages? The short answer: No. The slightly longer answer: No — but how they're taxed depends on whether those tips are through a W-2 job or an independent contracting gig.

Employers use Form 8027 to: Annually report to the IRS receipts and tips from their large food or beverage establishments.

Generally, you must report all tips you received in 2022 on your tax return including both cash tips and noncash tips. Any tips you reported to your employer as required in 2022 are included in the wages shown in box 1 of your Form W-2. Add to the amount in box 1 only the tips you didn't report to your employer.

If you don't report your tip income, it's possible the IRS could flag your return. They may look closer into your tax return or even initiate an IRS tax audit. You could also end up owing the IRS when you file your return if you don't report your tips properly to your employer throughout the year.

Tip income is taxable and must be reported | Internal Revenue Service.

Taxing tips began back in 1982 after Congress enacted the Tax Equity and Fiscal Responsibility Act (TEFRA) as a means of generating revenue through a series of tax increases, spending cuts, and other measures.

Keep a daily tip record Although you do not report these tips to your employer, you must report them on your tax return.

Employees who receive tips of less than $20 in a calendar month aren't required to report their tips to you but must report these amounts as income on their tax returns and pay taxes, if any.

Employees who receive tips of less than $20 in a calendar month aren't required to report their tips to you but must report these amounts as income on their tax returns and pay taxes, if any.