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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 12543
Experience:  Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
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I am a server in a fine dining restaurant in Colorado Springs.

Resolved Question:

I am a server in a fine dining restaurant in Colorado Springs. Our employer keeps 10% of our tips and distribute the rest between the servers. We don't sign anything and there's no receipts as well. Every other restaurants I worked we had to claim our tips our self. Here, our employer claims whatever he wants for our tips. Can we -the tipped employees- get in trouble with the IRS since we have no way to prove what we earn since there's no documentation about the amount of tips we get?
Eric
Submitted: 9 months ago.
Category: Tax
Expert:  Megan C replied 9 months ago.

Megan C :

Hello! I am a CPA here to assist you with your tax questions. My goal is to provide you with excellent service today.

Megan C :

How are you today?

Megan C :

You will not get into trouble with the IRS, so long as you are claiming what you are actually receiving in tips. What you are receiving is what your employer is distributing to you, not what is left for you on the table.

Megan C :

According to the IRS there are two different ways to track your tip income. You can keep a diary where you note your tips daily

Megan C :

or you can keep copies of receipts and charge slips showing the gratuity paid. However, for your purposes the diary would be the route to go because what is distributed to you is different than what's on the charge slips

Customer:

Can our employer get in trouble by pocketing 10% of out tips and not claiming it to the IRS?

Megan C :

Well, if he's not claiming the 10% as income to the iRS he can get into trouble

Customer:

Can we sue him for taking our tips?

Megan C :

No, if that is his restaurant those are his customers. He could technically take 100% of the tips, so long as he paid you minimum wage.

Customer:

According to the Colorado labor dept, tips are the sole properties of tipped employees. Employers have no right on their employees tips.

Megan C :

I'm sorry, but I'm a tax professional and not an attorney so I would not be familiar with Colorado law.

Customer:

I understand. Thank you Megan, you have been very helpful.

Megan C :

I can answer your question as to whether or not you can get into trouble with the IRS

Megan C :

I'm glad I could help.

Megan C :

If you would, please rate as "excellent" so that I may receive credit for assisting you today

Customer:

No problem

Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 12543
Experience: Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
Megan C and other Tax Specialists are ready to help you
Expert:  Megan C replied 9 months ago.
Thanks, Eric for your positive rating. Please come back and visit me any time you have a tax question that needs answered. It was a pleasure working with you today.

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