[Bill14564]

Originally Posted by OrangeBlossomBaby

There's no state income tax in Florida, so that doesn't apply here (though yes, it does apply in states with state income tax).

If you earn more than $25,000 in tips in a year, you have to pay federal income tax on everything above the first $25,000. That means - it isn't "no tax on tips." It's "tax on all tips beyond the first $25,000."

Math: $24.04 per hour is what you'd earn, just in tips, to earn $25,000 in tips in a year if you work 20 hours per week at your tip-paying job.

If you work the dinner shift at the FMK restaurants or places like Legacy Lopez CC, you'll be serving more than two tables per hour, and you'll likely be averaging more than $24.04 per hour in tips as a result. Add all those hourly tips up and at the end of the year, you will have earned more than the deduction you're allowed to take, and pay federal income tax on the balance. PLUS you still pay federal income tax on your hourly wages.

You can spend a lot of space working math problems but that doesn’t change the fact that this deduction, only available to some tipped workers, will exempt the first $25,000 in tips from federal income tax.