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my fiance works at a restaurant. the restaurant makes her declare all her credit card tips as earnings, but she always leaves with less due to her tipping out the bartender, bussers, etc. is this correct procedure, or should she only declare what she takes home?

Submitted: 1959 days and 15 hours ago.

Category: Tax

Value: $1

Status: AWAITING CUSTOMER ACTION

Answer

IRS form 4070, downloadable from www.irs.gov is to be used for reporting tips to the employer.

A section of the form 4070A is used to track that portion of tips received that are actually passed on to another employee(s).

Your fiance needs to report to IRS (on 4070 AND 1040) ONLY the tips she actually keeps. Form 4070 is the avenue of documenting this information.

If you have any further questions, please contact me.

By the way, one of the benefits of Form 4070 is that your fiance should then only be paying FICA and Medicare on the NET tips, rather than the total - reported tips are included in FICA and Medicare wages for employer and employee taxes.

Edited by SunTaxMan on 7/11/2004 at 7:27 PM

Accepts:
Expert:	T. R. Miller, The SunTaxMan
Pos. Feedback:	100.0 %
Answered:	7/11/2004

Public Accountant , Tax Preparer

30+ years in Public Accounting and Tax Preparation

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my fiance works at a restaurant. the restaurant makes her declare all her credit card tips as earnings, but she always leaves with less due to her tipping out the bartender, bussers, etc. is this correct procedure, or should she only declare what she takes home?

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