Get 1 1 2 3 4 5 5 8 Publication 531 Cat

Per IRS Publication 531 Reporting Tip Income, page 2: 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.

Tips are taxable income, and a failure to properly report your tip income could lead to the following issues: IRS audit of your return. Back taxes owed. Interest and penalties added to your tax debt.

Yes. All tips are taxable income and should be reported on your tax return.

You may deduct gambling losses only if you itemize your deductions on Schedule A (Form 1040) and kept a record of your winnings and losses. The amount of losses you deduct can't be more than the amount of gambling income you reported on your return.

If the IRS determines that tips have been underreported, you could end up paying FICA taxes (Social Security and Medicare contributions) on that income.

In addition, employers are required to pay the employer share of social security and Medicare taxes based on the total wages paid to tipped employees as well as the reported tip income. This information and tax are finally reported to the IRS on the appropriate forms by the employer.

If you fail to report your tips to your employer, the IRS can impose a penalty equal to 50% of the Social Security and Medicare tax you fail to pay. And, if you didn't earn enough in wages and tips that your employer pays to you directly to cover your tax withholding, your W-2 will show how much tax you still owe.

If you didn't report tips to your employer as required, you may be charged a penalty equal to 50% of the social security, Medicare, and Additional Medicare Taxes due on those tips.