Tax Relief - (Tips & Taxes)

A generous tip brightens up the drudgery of work, but it can not be pocketed without paying earning tax on it. Tips are as much your income as salaries and wages.

Tips come in different forms. The most typical are the tips received directly from customers. But a few tips are shared, too, and you ought to receive your share from fellow employees. Then there are tips passed on to you by your employer. None of these tips qualify for tax relief.

Tips are also received in kind; it can be a pass or a watch. The cash market value of such information is furthermore to be reported in your income.
You are also essential to news story tips to your employer every month if the total tips received is $20 or more. The idea is that your employer will be able to withhold tax tax on it. Even if it is less, there is no tax reprieve from the time even such petty amounts are required to be reported in your income.

Employers are required to allocate tips if the total tip reported by employees is lower than 8% of sales. However, if you continue a detailed record of the tips received, including tips shared, and hold reported the same to your employer, you may be able to justify a non-inclusion of allocated tips past what has been recorded and get some tax relief. Proper documentation is key in these matters. However, it is not possible to deduct tip-outs according to allocated tips.

So, go ahead and pocket as much tip as you can, but remember to keep a record of it.