Retirement tax questions

So the issue is with your tips, correct?

 

First, if you correctly declare all your tips to your employer, your employer is supposed to withhold the correct tax.  The only time you will run into trouble is if you don't report your tips to your employer but you do report them on your tax return (because then you will owe income tax, Medicare tax and Social Security tax and you will not have had enough withholding), or if your regular wages are not large enough to cover the tax you owe on your tips.

 

For example, suppose you earn $200 in regular wages and you declare $1000 in tips.  Your employer would be required to withhold $92 in social security and medicare tax and about $145 in federal income tax.  Since that's more than your wages, the most the employer could withhold is $108, and you would be short withholding for the week.  That could add up over the year.  

 

If you are regularly in the situation where you don't earn enough regular wages to cover the withholding on your tips, you can use the IRS withholding calculator to figure out how short you will be, and you can make estimated payments on the IRS web site to cover the difference.  Make sure you tell Turbotax about the estimated payments so you get credit for them when you prepare your tax return.

www.irs.gov/payments

 

You can probably also make estimated state income tax payments at your state tax web site.

 

Here is some information about tipping and taxes.

https://www.irs.gov/businesses/small-businesses-self-employed/tip-recordkeeping-and-reporting

 

https://www.irs.gov/pub/irs-pdf/p3148.pdf

 

https://www.irs.gov/taxtopics/tc761

 

Withholding calculator

https://www.irs.gov/individuals/tax-withholding-estimator