Your Tax Question - 020

Dear John, I recently became a waitress and I've been told that I have to keep track of my tips and that my employer will be automatically deducting taxes from tips that I am supposed to be making? Is this right? Just wondering, Sally
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Hi Sally,

The way I understand it, you are to keep a daily log of your daily tips and then report those to your employer. Keeping track of your tips is very important - especially if you "tip-out" to buss-boys and/or bartenders. When I worked at a restaurant many of the waitresses simply told the employer to stick $20.00 a day in their wages for tips but somehow I think the IRS has gotten wise to that practice. At the end of the year you will have to fill out form 4070A (found in publication 531) to determine the proper amount of tips that you owe taxes on.

Best of luck,
John

PS. I am a record keeping fanatic - if you need help I still have room on my limited client list. Email me