Guide for Reporting Tip Income by Employers & Employees

MIKE D’AVOLIO, CPA, JD SEPTEMBER 2, 2019 Employers and employees in the service industries that involve tipping need to comply with a unique set of tax rules.  Like wages, you must pay income tax, Social Security tax and Medicare tax on tip income....

IRS Rule Leads Restaurants to Rethink Automatic Tips Gratuities Added for Large Groups Will Be Taxed as Service Charges

An updated tax rule is causing restaurants to rethink the practice of adding automatic tips to the tabs of large parties. Starting in January, the Internal Revenue Service will begin classifying those automatic gratuities as service charges—which it treats...