Important Facts and Issues About Employee Tips
One thing that you should know about is 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. Because of that tip income will also be relevant to employers. You find that when you employ who depend on tips, you may not be aware of more about your reporting obligations regarding these tips. Now what is remaining is knowing if the employer is supposed to report tips. If you read more here, you will discover more legal issues with employee tips.
One thing that you should know as an employer, you are required by the law to report employee tips. Thus not all, but there are multiple reporting rules in this area that you should be aware of before anything else. The first rule is that employees have to report all of their cash tips to their employers if it exceeds twenty dollars. Remember that all the service employees will have to make these reports. But it will be important to organize with all your employees so that they can all report the tips.
Besides, employers are also supposed to collect employee tip reports. This should include all the tips collected monthly. One thing with employees is that sometimes they can fail to submit the report and you must follow up. The good thing with this is that you will be able to get accurate reports for tax reasons.
Apart from that may also request more frequent tips report as this is what is required by the law. This is because employers need to update their tip record daily. This is important in making sure that they have accurate figures for tax reasons and accuracy.
The next thing is that employers are required to withhold the relevant 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. Besides, the employers are also required to withhold the relevant income and tip income as they do with regular earnings.
To sum up, employers must also match the amount paid by the employees in FICA taxes as they do with regular income. Remember that all these rules and more are supposed to be followed so that you don’t find yourself on the wrong side of the law.