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Tip Income Needs to be Reported on your Individual Tax Return

If you work a job where you make tips as part of your income, these tips do need to be reported as part of your gross income on your tax return. Tips that are taxable can be:

• Tips added using credit cards
• Tips directly from customers
• Tips from a tip splitting arrangement with other employees

Tips that many people do not know count as taxable income are non-cash tips. For example if you are given tickets to an event by a customer as a tip, this amount needs to be included as taxable income.

Employees should keep a daily tip record to keep track of their tips during the year. The IRS also offers a tool to assist you in reporting your tip income:

https://www.irs.gov/help/ita/is-my-tip-income-taxable

Please consult your tax advisor on all the above information.

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