Important Facts and Issues About Employee Tips
One thing that you should know about is that majority of employees in the service industry receive tips. Because of that employers need to have a report of this for tax purposes. These tips bring the difference between poverty and financial comfort. Because of that tip income will also be relevant to employers. The challenging part with people who employ people who depend on tips is that they don’t know a lot of obligations concerning those tips. Now what is remaining is knowing if the employer is supposed to report tips. If you read more here, you will discover more legal issues with employee tips.
First of all, you required by the law to report employee tips. The thing is that there are multiple different reporting rules in this area that you should be aware of. One of the rules is that employees are required to report all their cash tips to the employer if their monthly cash tip is more than twenty dollars. Besides, you should know that these reports are supposed to be made by all the service employees and there is no exception. The other thing is that you will have to design a way in which you can make all your employers report tips.
The next one is that employer is also required to report employee tip reports. Besides, you should also make sure that the report contains all the tips received monthly. One thing with employees is that sometimes they can fail to submit the report and you must follow up. As a result, you will be able to get accurate figures for tax reasons.
Apart from that may also request more frequent tips report as this is what is required by the law. The law needs the employers to update their tip report daily. This is important in making sure that they have accurate figures for tax reasons and accuracy.
This should be followed by withholding the pertinent taxes and make reports to the IRS. One thing that you should know is that filling paystubs manually and you can best execute this process using an online paystub generator. You should also know that employers are supposed to withhold the relevant income and tip income as well as FICA taxes as they do with regular earnings.
Besides, the employers are also required to match the amount paid by employees in FICA taxes the way they do with regular taxes. Remember that all these rules and more are supposed to be followed so that you don’t find yourself on the wrong side of the law.