How do i claim my tax
Do I have to claim tips on my tax return?
Reporting your tip income correctly is not difficult. You must do three things.
1. Keep a daily tip record.
2. Report tips to your employer.
3. Report all of your tips on your income tax return.
Keep a Daily Tip Record
It is important for you to keep a record of your daily tips, so you can report your tips accurately to your employer and on your tax return, and prove your tip income if your return is ever audited.
How to keep a daily tip record. There are two simple ways to keep a daily record. You can either:
· Write information about your tips in a tip diary, or
· Keep copies of document that show your tips
It is important to note that you do not need to write the amount of any service charge that your employer adds to a customer’s bill and then pays you and treats as wages, in your tip dairy. This is part of your wages, not a tip.
Report Tips To Your Employer
Why you should report your tips to your employer. You must report tips to your employer so that:
· They can withhold federal income
tax and social security and Medicare taxes
· They can report the correct amount of your earning to the Social Security Administration, and
· You can avoid the penalty for not reporting tips to your employer.
What tips to report. Report to your employer only, cash, check, and debit and credit card tips that you receive. If your total tips for any 1 month are less than $20, do not report the tips for that month to your employer.
If you participate in a tip-splitting or tip-pooling arrangement, report only the tips you receive.
How to report. If your employer does not give you any other way to report tips, you can use Form 4070. Fill in the information asked for on the form, sign and date the form, and give it to your employer. If you do not use Form 4070, give your employer a statement with the following information every month.
· Your name, address and social security number
· Your employer’s name, address, and business name
· The month in which you received tips
· The total tips required to be reported for that period
When to report. Give your report for each month to your employer by the 10 th of the next month.Source: www.taxslayer.com