Important Facts and Issues About Employee Tips
You find that majority of employees in the service industry receive tips. For that matter, it is vital that employers should have a report of this for tax reasons. Besides, tips are regarded as what creates the difference between poverty and financial comfort. Perhaps this is what makes tip income more relevant to employers too. 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! Do you have to report tips as an employer. Here are some of the things that will help you learn more info. on the legal issues with employee tips.
One thing that you should know as an employer, you are required by the law to report employee tips. But it is vital to know that there are multiple different reporting rules in areas that you should be aware of. The first rule is that employees have to report all of their cash tips to their employers if it exceeds twenty dollars. Besides, you should know that these reports are supposed to be made by all the service employees and there is no exception. One important that you will do as an employer is finding a way in which you make all your employees responsible when it comes to reporting tips.
Besides, employers are also supposed to collect employee tip reports. This should include all the tips collected monthly. Remember that it is possible that some of the employees can fail to submit the tip report and you have to make sure that it is done. The good thing with this is that you will be able to get accurate reports for tax reasons.
Besides, the minimum law requirement also expect the employers to ask for more frequent report than that. The law needs the employers to update their tip report daily. By doing this they will be able to get exact figures for tax reasons.
This should be followed by withholding the pertinent taxes and make reports to the IRS. This process is tedious and challenging and you can easily expedite it using an online paystub generator as opposed to the manual process. 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.
Finally, employers also must match the amount paid by the employees in FICA taxes as in the case with regular income. The best way of being compliant with the law is by following the tip regulations.
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