Tax Plus Etc.

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President Trump has pledged to end taxes on tips.

But so far, no law eliminating taxes on tips has been enacted. For now, employers must follow existing IRS rules. Here are some employer responsibilities: 1) Send each employee a W-2 that includes reported tips. 2) Keep employees’ tip reports. 3) Withhold taxes, including income taxes and the employee’s share of Social Security and Medicare taxes, based on wages and reported tip income. 4) Pay the employer share of Social Security and Medicare taxes based on the total wages and reported tip income. 5) Report this information to the IRS on Form 941. 6) Deposit withheld taxes according to federal deposit requirements. Contact us with questions.

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