If your pay from work involves compensation through tips, then the IRS would like you to be aware of a few facts about tip income. Here are four key points to keep in mind:

  1. Tips are taxable Tips are subject to federal income, Social Security and Medicare taxes. The value of non-cash tips, such as tickets, passes or other items of value, is also considered income and subject to tax.
  2. Include tips on your tax return You must include in gross income all cash tips you receive directly from customers, tips added to credit cards, and your share of any tips you receive under a tip-splitting arrangement with fellow employees.
  3. Report tips to your employer If you receive $20 or more in tips in any one month, you should report all of your tips to your employer. Your employer is required to withhold federal income, Social Security and Medicare taxes.
  4. Keep a running daily log of your tip income. You can use IRS Publication 1244, Employee's Daily Record of Tips and Report to Employer, to record your tip income.

For more information see IRS Publication 531, Reporting Tip Income, and Publication 1244 which are available at www.irs.gov. Both can be ordered by calling 800-TAX-FORM (800-829-3676).

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Upcoming Tax Dates

December 12 — Employees who work for tips
If you received $20 or more in tips during November, report them to your employer - Details

December 12 — Communications and air transportation taxes under the alternative method.
Deposit the tax included in amounts billed or tickets sold during the first 15 days of November.

December 14 — Regular method taxes
Deposit the tax for the last 15 days of November.

December 15 — Corporations
Deposit the fourth installment of estimated income tax for 2016 - Details

December 15 — Social security, Medicare, and withheld income tax
If the monthly deposit rule applies, deposit the tax for payments in November.

December 15 — Nonpayroll withholding
If the monthly deposit rule applies, deposit the tax for payments in November.

December 25 — Everyone
Federal Holiday (Christmas Day) - Details

December 28 — Communications and air transportation taxes under the alternative method
Deposit the tax included in amounts billed or tickets sold during the last 15 days of November.

December 29 — Regular method taxes
Deposit the tax for the first 15 days of December.

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