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If you work in a service where you get tips, guess what? The IRS expects you to report them and pay taxes on them.

Card Consolidation Credit Debt Your Tip Earnings and Taxes

Credit Union The internal revenue service takes a very simple approach to tips. It views all tips you make in your job as taxable income that must be reported and for which taxes must be paid. Put another way, the IRS has a simple but brutal view towards taxes

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Merchant Credit Guide Co Now tips come in different forms. Some are received directly from customers while others are automatically added to the customer's bill. The IRS takes the position you must report and pay taxes on both amounts. This also includes taxes you earn through any group splitting where all tips are collected together and then split amongst the employees. On top of this, the IRS also takes the view that any non-cash tips such as tickets to something are also income that should be reported and taxes paid on. Put another way, the internal revenue services gets you coming and going.

If you are working, your employer may offer childcare support in the form of childcare vouchers. The Childcare Voucher Scheme involves giving up some of your pay in exchange for the childcare vouchers and there are tax advantages if you receive vouchers instead of pay. However cutting your salary could take you below the earnings threshold where you are eligible for certain benefits. Your state pension, maternity allowance, Statutory Maternity Pay, Statutory Paternity Pay and tax credits could all be affected if your pay falls below the lower earnings limit.

Apply Online For Credit Card To make things a little more brutal, the internal revenue service requires you to take some steps in reporting tips. If your tips total $20 or more in any calendar month from a single job, you are supposed to report the total to the employer by the 10th day of the next month. The employer is then supposed to withhold federal income tax, social security and Medicare taxes from your paycheck. Keep in mind that the failure to do so can lead to the placement of a 50 percent penalty on your taxes. Obviously, the IRS is fairly serious about getting its money.

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By Card Credit Debt Debt Guide Tips paid to waitresses, bartenders, barbacks and so on are a hot spot with the IRS and always have. Since tips tend to be given in cash form, the potential for forgetting to report them is particularly high. The IRS seems to think so and has shown a generally aggressive attitude on the subject. If you indicate you are a waitress or bartender on your tax return, but fail to report any tip income, it could be audit time.

time bartenders had median hourly earnings (not including tips) of $6.25 in 1998. The middle 50 percent earned from $5.72 and $7.71; the top 10 percent earned at least $9.19 an hour. Like waiters and waitresses, bartenders employed in public bars may receive more than half of their earnings as tips. Service bartenders are often paid higher hourly wages to offset their lower tip earnings.

Credit Repair Richard A. Chapo is with BusinessTaxRecovery.com - obtaining tax refund recovery for overpaid small business taxes. Visit BusinessTaxRecovery.com to read more business tax articles or our new tax credits page.

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Credit Score Rick Chapo is with Nomad Journals - makers of writing journals. He is also with BusinessTaxRecovery.com - information on taxes.

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