What are Some of the Legal Issues With Employee Tips
You find that majority of employees in the service industry receive tips. For that matter, it is vital that employers should have a report of this for tax reasons. If you read more, you will realize that tips are the difference between poverty and financial comfort. Because of that tip income will also be relevant to employers. If you employ people who depend on tips, you might not know more info. about your reporting obligation about these tips. Now! Do you have to report tips as an employer. If you read more here, you will discover more legal issues with employee tips.
First of all, you required by the law to report employee tips. But it is vital to know that there are multiple different reporting rules in areas that you should be aware of. One of the rules is that employees are required to report all their cash tips to the employer if their monthly cash tip is more than twenty dollars. You should also note that there is no exception as all the service employees are supposed to submit these reports. One important that you will do as an employer is finding a way in which you make all your employees responsible when it comes to reporting tips.
Apart from that, the employer is also required to collect employees’ tip reports. This should include all the tips collected monthly. You should be aware that some of the employees might not be able to submit the reports and it is upon you to make sure that it is done. As a result, you will be able to get accurate figures for tax reasons.
Apart from that may also request more frequent tips report as this is what is required by the law. This is because employers need to update their tip record daily. You find that this is necessary for the employers to have precise data for tax reasons.
The next thing is that employers are required to withhold the relevant taxes and make reports to the IRS. This process is tedious and challenging and you can easily expedite it using an online paystub generator as opposed to the manual process. Besides, the employers are also required to withhold the relevant income and tip income as they do with regular earnings.
To sum up, employers must also match the amount paid by the employees in FICA taxes as they do with regular income. Remember that all these rules and more are supposed to be followed so that you don’t find yourself on the wrong side of the law.