Do you have to report tip income on your tax returns?

During the pandemic, many people have lost their jobs and have had to look for jobs to get out of their way. Some of those options are jobs that include receiving tips. Do they have to report this income on their tax return?

Many people do not know if the money received as a tip is taxable and that is why the IRS has posted the answer to this question on its website. Do you have to report tip income when they file their tax return?

The answer, according to the agency is that generally, income received from any source, including tips, is taxable.

Here's some information that the IRS is giving to help taxpayers report tip income.

All tips that taxpayers receive are income and subject to federal income tax, so all tips they receive must be included in their gross income.

This includes:
Tips directly from customers.
Tips added using credit cards.
Tips from a tip-splitting arrangement with other employees.
The value of non-cash tips, such as tickets, passes or other items of value are also income and subject to tax.

All tip income must be reported when you file your taxes

The three things that can help taxpayers correctly report their tip income are:
Keep a daily tip record.
Report tips to their employer.
Report all tips on their income tax return.

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