Federal Tax, Tax

Service Industry Tips Can Be Taxable

Like most income, tips in the service industry are taxable. This includes tips paid directly to you by customers, tips paid by credit, debit, or gift cards and tips split with other employees. Noncash tips such as passes or tickets are also taxable. If you receive tips, the IRS advises you to keep a daily tip record and to report tips to your employer and on your income tax return. What if you’re the employer of tipped workers? Employees who receive $20 or more in any month must report tips to you by the 10th of the next month. You’re responsible for withholding income and employment tax on the reported tips. Click here for more details on this subject. Questions? Reach out to Cg.  © 2023