What are Some of the Legal Issues With Employee Tips
It is essential to note that many employees in service industries receive tips. Because of that employers need to have a report of this for tax purposes. Besides, tips are regarded as what creates 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. The big question is whether you have to report these tips or not. If you read more here, you will discover more legal issues with employee tips.
One thing that you should know as an employer, you are required by the law to report employee tips. Thus not all, but there are multiple reporting rules in this area that you should be aware of before anything else. 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. Besides, you should know that these reports are supposed to be made by all the service employees and there is no exception. 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. Go here to discover more.
Besides, employers are also supposed to collect employee tip reports. You should also make sure that the report includes all the tips received monthly. Remember that it is possible that some of the employees can fail to submit the tip report and you have to make sure that it is done. This way you will be able to get accurate figures for tax reasons.
Besides, the minimum law requirement also expect the employers to ask for more frequent report than that. This is because employers need to update their tip record daily. By doing this they will be able to get exact figures for tax reasons.
This should be followed by withholding the pertinent taxes and make reports to the IRS. You find that this process can be overwhelming when done manually and you can best do it using an online paystub generator. You should also know that employers are supposed to withhold the relevant income and tip income as well as FICA taxes as they do with regular earnings.
Finally, employers also must match the amount paid by the employees in FICA taxes as in the case with regular income. The best way of being compliant with the law is by following the tip regulations. Go here for more details.