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There is no credit for paying out a portion of your tip.
However, you may reduce the amount of your reportable tips if you share some of it with other employees.
For example, if you receive a $100 tip and give bartender $25, you only need to report $75.
Please see the below link for more information on tip income:
How to enter in Turbo Tax:
https://ttlc.intuit.com/questions/1899731-entering-unreported-tips
There is no credit for paying out a portion of your tip.
However, you may reduce the amount of your reportable tips if you share some of it with other employees.
For example, if you receive a $100 tip and give bartender $25, you only need to report $75.
Please see the below link for more information on tip income:
How to enter in Turbo Tax:
https://ttlc.intuit.com/questions/1899731-entering-unreported-tips
From what I was told from an Intuit employee is that you can only report payout income you receive from other employees not payout expenses you give out. Is that double dipping by the IRS or what?
This is what they sent me from the IRS
"If you participate in a tip-splitting or tip-pooling arrangement, report only the tips you receive and retain. Don't report on your income tax return any portion of the tips you receive that you pass on to other employees. However, you must report tips you receive from other employees."
Anyone clear on this???
No, it isn't double dipping by the IRS, everyone claims what they walk away with.
In other words, if you receive $100 in tips, but you need to give the bussers $20, you report $80 in tips and the busser reports $20.
You don't report 100 and then report 20 as a credit, you only report what you retain, or ultimately walk out with.
If the employer is reporting the tips on your W-2, they need to be aware of the tip split (and they usually are) and report the tips on your W-2 as what you received AFTER the split.
"If the employer is reporting the tips on your W-2, they need to be aware of the tip split (and they usually are) and report the tips on your W-2 as what you received AFTER the split. "
Many employers don't do it.
There are rules to how the Employer reports your tips.
If you are having difficulties with how the tips are reported, talk to your employer or payroll department.
You could also contact your union representative if you are a member.
According to the IRS:
“Report tips to the employer, unless the total is less than $20 per month per employer
The Internal Revenue Code requires employees to report (all cash tips received except for the tips from any month that do not total at least $20) to their employer in a written statement. Cash tips include tips received from customers, charged tips (e.g., credit and debit card charges) distributed to the employee by his or her employer, and tips received from other employees under any tip-sharing arrangement. No particular form must be used; however, the statement must include:
• Employee signature,
• Employee's name, address, and social security number,
• Employer's name and address (establishment name if different),
• Month or period the report covers, and
• Total of tips received during the month or period.
The employee may use any document that has the above elements such as Form 4070, Employee's Report of Tips to Employer, (available only in Publication 1244, a form that is provided by the employer or an electronic system provided by your employer to report your tips.
Both directly and indirectly tipped employees must report tips to the employer.”
“When to Report Tips to Your Employer
Employees must report tips to the employer by the 10th of the month after the month the tips are received. For example, tips received by an employee in August 2020 are required to be reported by the employee to the employer on or before September 10, 2020. If the 10th falls on a Saturday, Sunday, or legal holiday, an employee may give the report to the employer by the next day that is not a Saturday, Sunday, or legal holiday. An employer may require employees to report tips more than once a month; however, the statement cannot cover a period of more than 1 calendar month.”
“Reporting Tips Allocated by Your Employer
If the total tips reported by all employees at a large food or beverage establishment (as defined below) are less than 8 percent of the gross receipts (or a lower rate approved by the IRS), then the employer must allocate the difference among the employees who receive tips. If your employer allocated tips to you, then the allocated tips are shown separately in Box 8 of your Form W-2. They are not included in Box 1 (Wages, tips, other compensation), Box 5 (Medicare wages and tips), or Box 7 (Social security tips) of your Form W-2, Wage and Tax Statement.
Generally, you must report the tips allocated to you by your employer on your income tax return. Attach Form 4137, Social Security and Medicare Tax on Unreported Tip Income, to Form 1040, U.S. Individual Income Tax Return, or Form 1040-SR, U.S. Tax Return for Seniors, to report tips allocated by your employer (in Box 8 of Form W-2). Other tips not reported to the employer must also be reported on Form 4137. However, you do not need to report tips allocated to you by your employer on your federal income tax return if you have adequate records to show that you received less tips in the year than the allocated amount.”
“Allocating Tips
If the total tips reported by all employees at a large food or beverage establishment are less than 8 percent of the gross receipts (or a lower rate approved by the IRS), then employer must allocate the difference among the employees who receive tips. These "allocated tips" are computed and reported on Form 8027, Employer’s Annual Information Return of Tip Income and Allocated Tips. Employers show allocated tips on the employee's Form W-2, Wage and Tax Statement, in the box 8 titled "Allocated tips." No income tax, Social Security or Medicare taxes are withheld on allocated tips.”
Well, one employer that paid the servers daily allowed us to show payouts on the POS. My current one pays every 2 weeks and if you report the amount less what you paid out, he pays you the 80 not the 100. So now you only get 60 with a 20 payout! He will not change it and said, work it out to us in the front of house... SO, if your employer is like that, IRS get a double dip! There are many out there I'm sure that are not corporate and do as they want.
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