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What are Some of the Legal Issues With Employee Tips
One thing that you should know about is that majority of employees in the service industry receive tips. You should know that it is also important for the employers to have a report of this for tax reasons. These tips bring the difference between poverty and financial comfort. Because of that tip income will also be relevant to employers. The challenging part with people who employ people who depend on tips is that they don’t know a lot of obligations concerning those tips. Now! Do you have to report tips as an employer. Click here for more on this website about some of the legal issues with employee tips.
One thing that you should know as an employer, you are required by the law to report employee tips. Thus not all, but there are multiple reporting rules in this area that you should be aware of before anything else. The first rule is that employees have to report all of their cash tips to their employers if it exceeds twenty dollars. Besides, you should know that these reports are supposed to be made by all the service employees and there is no exception. One important that you will do as an employer is finding a way in which you make all your employees responsible when it comes to reporting tips.
The next one is that employer is also required to report employee tip reports. Besides, you should also make sure that the report contains all the tips received monthly. One thing with employees is that sometimes they can fail to submit the report and you must follow up. This way you will be able to get accurate figures for tax reasons.
Apart from that may also request more frequent tips report as this is what is required by the law. The law needs the employers to update their tip report daily. This is important in making sure that they have accurate figures for tax reasons and accuracy.
Having done that, employers must withhold the relevant taxes and make a report to the IRS. This process is tedious and challenging and you can easily expedite it using an online paystub generator as opposed to the manual process. You should also know that employers are supposed to withhold the relevant income and tip income as well as FICA taxes as they do with regular earnings.
To sum up, employers must also match the amount paid by the employees in FICA taxes as they do with regular income. The best way of being compliant with the law is by following the tip regulations.