TIP DU JOUR: Report all tips as taxable income
The tips you receive as an employee from those and other services is taxable income, according to the Internal Revenue Service.
Some tips about tips:
Tips are subject to federal income, Social Security and Medicare taxes, and may be subject to state income tax as well.
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.
If you receive $20 or more in tips in any one month, you should report all your tips to your employer.
You can use IRS Publication 1244, Employee's Daily Record of Tips and Report to Employer, to record your tip income. For a free copy of Publication 1244, call the IRS toll free at (800) TAX-FORM, or (800) 829-3676.