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Originally Posted by fdpaq0580
Are you alluding to possible unreported income?
I wonder, if a tip is "income: ie wage or salary? Or is a tip actually a "gratuity" or gift, legally speaking. Reporting income is, basically required. Not so with gifts up to a certain amount. 2,000 gift at @ $30.00 each. Reported separately, if at all, I would assumel.ðŸ«
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The IRS has already determined that tip income received by servers in restaurants is taxable income. It is not a gift. They have established special tax reporting procedures for this income. Before the new 2025 law, restaurants were required to provide a W-2 form to their servers showing taxable tip income equal to 8 percent of the gross sales of the restaurant. The servers can either pay tax on this amount or they can provide detailed records to prove that their tip income for the year was less than the 8 percent, and be subject to an IRS audit. That is one reason why tipped employees cannot be required to share their tip income with non-tipped employees.