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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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I'm trying to get a favorable loan house, but my income

Customer Question

I'm trying to get a favorable loan for a house, but my income shown on my taxes is somewhat low because I get a most of my income from tips. I'd like to claim more, but how much more is standard or appropriate?
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.

Tips you receive from customers are generally subject to withholding. Employees are required to claim all tip income received. This includes tips your employer paid over to you for charge customers and tips you received directly from customers.

Customer: replied 1 year ago.
I'm under a tip compliance from the IRS. However, it doesn't reflect everything exactly.
Expert:  Lev replied 1 year ago.

Reporting your tip income correctly is not difficult. You must do three things.
--Keep a daily tip record.
--Report tips to your employer.
--Report all your tips on your income tax return.

There are two ways to keep a daily tip record. You can either:
--Write information about your tips in a tip diary, or
--Keep copies of documents that show your tips, such as restaurant bills and credit or debit card charge slips.

You should keep your daily tip record with your tax or other personal records.

Expert:  Lev replied 1 year ago.

We may not say that you are "under a tip compliance" if you either do not keep record of your tips or if you did not report the full tip amount on your tax return.
In this case - you woudl need to (1) re-establish your tip records and (2) amend your past tax returns to add tip income if it was not reported to your employer.

Expert:  Lev replied 1 year ago.

How to report tips?

Report your tips with your wages on Form 1040, line 7; Form 1040A, line 7; Form 1040EZ, line 1 - depending which from you are using.

Any tips you reported to your employer as required are included in the wages shown in box 1 of your Form W-2. Add to the amount in box 1 only the tips you did not report to your employer.

Expert:  Lev replied 1 year ago.

Let me know if you need help to amend the tax return you already filed.

Expert:  Lev replied 1 year ago.

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