How to pay tip taxes in the US

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The United States Revenue Service (IRS) reports that employees of US companies who receive $ 20 or more in the form of tips for a calendar month are required to report to their employers the total amount of tips they receive.

No later than 10 on the date of each month, employees of restaurants, bars and other establishments must submit written reports. They include, among other things, cash received in cash and tips that customers add to their invoices when paying with credit or debit cards.

If employees receive less than $ 20 in tips, they are not required to report to employers, but must include these amounts in their income and pay taxes if they are due.

The fee for services added to the invoice for payment is not considered as a tip, but as a form of salary that is subject to withholding taxes on social security and to the program fund. Medicareas well as withholding federal income tax.

Typical types of service fees (sometimes called "auto gratuities") in service businesses include:

• Serving large groups of customers (restaurant);
• Drink service fee (restaurant and night club);
• Payment for food and drinks in the rooms (hotel and resort);
• Luggage transfer fee;
• Mandatory shipping charge (pizza or other retail items).

Salaried employees can use Form 4070A, Salaried Employee's Daily Tip Report (Employee's Daily Record of Tips) to maintain daily records of tips received and Form 4070, Employee's Report of Tips to Employer (Employee's Report of Tips to Employer) to report these amounts to your management.

The employer is responsible for paying the part of the social security tax payable to the employer and to the fund of the program Medicare. The part of the employee’s salary that is taxable to the fund Medicare and exceeding the threshold is subject to additional tax.

Additional information on additional tax to the fund Medicare can be received in the section "Questions and answers" on the IRS website.

Any remaining unpaid federal income taxes by employers can deduct from the next employee wage until the end of the calendar year.

In the event that the total amount of tips reported by all employees of a large catering or beverage establishment is less than 8% of the proceeds, the employer must distribute the difference between the employees who received the tips.

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