Tip Income is Taxable
Remember Brewers, you must report tip income, and you are eligible for a tax credit on tips collected.
If your employees receive $20 or more a month in tips, then you must withhold federal income, Social Security and Medicare taxes. Be sure to have your employees keep a daily log of their tips so you can properly withhold the required taxes.
As a result of your employees receiving tips, and you paying the proper taxes on those tips, you are eligible for a credit equal to the amount you paid in Social Security and Medicare taxes. Here’s what you need to know:
This credit is only available for those in the food and beverage industry.
Your employees must receive the tips from customers for providing, delivering, or serving food and beverages for consumption.
You must pay the incurred employer Social Security and Medicare taxes on the tips.
Think you’ve been missing out on this valuable credit? Contact the Brewers Professional Alliance today -- you may be able to recover the last three years of money owned to you, as a result of this credit.