Are you someone who works in a restaurant as a bartender or a server? Maybe you deliver pizza, give people massages, or drive a taxi for a living. What do all of these completely different jobs have in common? They all receive tips. And with receiving tips comes a different kind of tax situation than if you were to not receive tips according to San Diego tax lawyer, Tax Tiger.
Basically the following happens:
1. Keep track of your tips
2. Report your tips to your employer
3. Your employer includes those tips into your income through the payroll processing system
4. Your W-2 will show this reported tip in Box 8
It’s as simple as that! But there are a few extra bits of information you may want to be aware of.
Here are a few pointers when it comes to your taxes:
Don’t make that much in tips but still make tips? Don’t worry about reporting how much you make in tips to your employer if it’s less than $20 a month.