I previously had a run-in with the IRS due to some mistakes I made in tracking my income, which has landed me a large debt and certainly taught me the lesson not to mess with the IRS.
I have been jobless the last 6 months and have come to realize remote work isn’t for me, so I recently got a job working as a delivery driver for a reputable pizza company in town.
The hourly pay is pretty low ($9/hr) but the tips I make are around $60-130 for a 6-hour work day. Each day I "cash out" my tips as I’m clocking out, and my manager asks me "how much I want to claim in tips". The idea is something like I report ~10% of my cash tips so I get to bring home more money in the end of the day. I’m told this is normal and happens all the time in the US with cash tips. This sounds incredibly sketchy to me, and I’m not sure how to navigate this situation.
Do I ask them to claim ALL my cash since they’re already claiming any of my funds? Or do I just ignore what they say and tally my tips manually so I can report them accurately next tax season? And is there a secret third option where I'm supposed to report them to the IRS for doing this??
Place of Work Suggests to not Report Most of Cash Tips?
byu/Zerithax intax
Posted by Zerithax
5 Comments
It probably does happen all the time, but you should make sure all your income is reported.
You should accurately report your income
They don’t want you to report all your tips because they have to pay the employer’s share of FICA taxes on your reported tips. They aren’t trying to help you – they’re trying to cut their costs illegally.
If you go to the tipping subs, all of the servers say they are honest American taxpayers who report every penny they earn. They are suffering because they make less than minimum wage and need tips to just barely survive. They swear no one leaves cash tips. So say you claim it if someone asks but in reality just pocket the money like every other server.
PS that is why they deserve 25% tips.
Of course it is sketchy and as someone who has already been in trouble with the IRS, you know better than to mess with it.