| Underreported tip income. It's a problem the IRS has | | | | of tips, and what the benefits of tip reporting are |
| been trying to snuff out for years. And as a server at | | | | (higher Social Security benefits down the line). The |
| a restaurant, you can be sure the IRS will be paying | | | | bottom line is this: the more you know about your tip |
| special attention when you file your taxes. | | | | reporting responsibilities, the less likely it is that you'll |
| The IRS believes hundreds of millions of dollars in tips | | | | wind up in a showdown with the IRS. |
| simply aren't reported each year. Whether this | | | | - Keep Records - Detailed records are the key to |
| underreporting is intentional or not isn't important to | | | | avoiding trouble with the IRS. By documenting your |
| them. The simple fact that income goes untaxed is | | | | daily earnings, even if the IRS decides to look a little |
| enough to draw an IRS audit, and it could land you in | | | | closer, you have a written record you can use in your |
| serious trouble. | | | | defense. If they decide to audit you and you have no |
| Despite the fact that the IRS has gone on a public | | | | records, you're in deep trouble. When it comes to |
| relations campaign to appear more friendly, you don't | | | | tracking your tips, it's better to be safe than sorry. |
| want to end up in their crosshairs. Facing an audit | | | | - Seek Professional Help - The best thing you can do |
| alone is a stressful, confusing, and down right scary | | | | to avoid IRS audits is to work with a tax professional. |
| process. | | | | Working with a professional who understands the ins |
| Thankfully, there are things you can do to avoid this | | | | and outs of tax code and the IRS will take the |
| headache. | | | | guesswork out of tip reporting. It's a worthwhile |
| - Get Educated - The first thing you should do is to | | | | investment that can save you time, money, and a lot |
| educate yourself on tip reporting. Understand what | | | | of stress. |
| your responsibilities as a server are, how to keep track | | | | |