- Revolutionizing Tax Compliance: IRS’s New Era of Transparency & Efficiency - December 7, 2023
- Navigating the ERC Withdrawal Process: A Guide for Businesses - November 29, 2023
- How to Safeguard Your Donations and Avoid Fake Charities - November 17, 2023
Did you know that all income is taxable? This means that if you’re making money from the gig economy (like selling things online or driving for a delivery service) or receiving tips in the service industry, you need to report that income on your tax return.
If you work in a service industry like restaurants or hotels and receive tips, you’ll also need to report that income. Tips can be either cash or non-cash (like tickets or other goods). You’ll need to report any cash tips to your employer, who will include them on your W-2 form. Non-cash tips need to be reported on your tax return.
If you’re part of the gig economy, you’ll need to report all the money you make—even if it’s just a side hustle. This includes any kind of payment, like cash, property, goods, or digital assets. You should visit the gig economy tax center page on IRS.gov to learn more.
If you didn’t report any cash tips to your employer, you’ll need to include them as additional wages on Form 4137 and pay the Social Security and Medicare tax on them. You don’t have to report tips that are less than $20 per month, but for larger amounts, you’ll need to report them to your employer by the 10th of the following month.
To report your tips to your employer, you can use Form 4070 or another electronic system provided by your employer. For more information, check out the Tip Recordkeeping and Reporting page on IRS.gov.
Don’t worry, reporting your tips is easy. Just follow the instructions on the IRS website and you’ll be done in no time. And remember, if you have any questions, the IRS is always there to help. Or better yet, join our DeTax University program with 16 classes that will guide you through saving taxes in areas like vehicles, short term rentals, retirement plans and so much more. Our goal is to save you over $10,000 in taxes each year. Click here for our special offer.