Whether received directly from a customer, through a tip pool, or added on a credit card slip, the Internal Revenue Service (IRS) considers all tips you earn as reportable income, subject to federal and often state income taxes. For restaurant employees and operators, navigating the rules for tracking and reporting this income is a critical part of financial compliance. This guide breaks down the essential procedures for both staff and management, detailing how tips are taxed and the correct way to report them to avoid penalties and ensure accurate paychecks and filings.
Are Tips Taxable?
