Don’t Fall for These 12 Common Tax Myths

MYTH: RESTAURANT TIPS DON’T COUNT AS INCOME

Ah, if only this were so. But it’s not. Federal tax laws require that any tips over $20 in any given month should be reported to the employer, which includes tips from customers as well as any pooled tips. If the employer doesn’t report tip income for workers, it’s important to keep track of tips independently and file Form 4070 (or Form 4137 for unreported tip income). If part of the tips received are pooled, the person getting the tip needs to report only the part that was kept.

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