Here’s what taxpayers need to know about reporting tip income on their tax return

Personal Tax Returns in Houston

Generally, income received from any source, including tips, is taxable. Here's some information to help taxpayers report tip income.

All tips that taxpayers receive are income and subject to federal income tax. Taxpayers must include all tips they receive in their gross income. This includes:

• Tips directly from customers.
• Tips added using credit cards.
• Tips from a tip-splitting arrangement with other employees.
• The value of non-cash tips, such as tickets, passes or other items of value is also income and subject to tax.

Three things can help taxpayers correctly report their tip income.

• Keep a daily tip record.
• Report tips to their employer.
• Report all tips on their income tax return.
• Use the Interactive Tax Assistant

This tool provides answers to tax law questions. Taxpayers can use the Interactive Tax Assistant on IRS.gov to find out if their tip income is taxable.

If an employee receives $20 or more in any month, they must report their tips for that month to their employer by the 10th day of the next month. The employer must withhold federal income, Social Security and Medicare taxes on the reported tips.

Contact: 📞281-861-7718 📍4654 Hwy 6, Houston, TX 77084

Source: IRS

Alfredo Gaxiola has worked on numerous IRS problem cases and has successfully settled with the IRS to release liens on houses, bank accounts and wages and, if needed, setting a payment installment plan that is not burdensome for the client. He has conducted appeals before the U.S. Tax Court and obtained favorable resolutions in reducing the tax debt of his clients. Mr. Gaxiola served as Treasurer of Camara de Empresarios Latinos, one of the largest and strongest Hispanic organizations in the city of Houston. He has conducted financial and accounting seminars for the Houston Small Business Development Corporation, as well.

Personal Tax Returns in Houston

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