Tip Income Definition

Tip income is tips received directly from customers. This can include cash tips or tips charged to a debit or credit card.

Tip Income Extended Definition
Employees must report all of their tip income to their employer. The employer is then responsible for withholding federal, state, and local taxes from the tip income.

Tip income does not include service charges, like bottle service charges or large party charges.

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How to Withhold Taxes on Tips

Last Updated By

Rachel Blakely-Gray | May 01, 2023

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