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Anonymous asked in Business & FinanceTaxesUnited States · 1 decade ago

I noticed that my tips are being taken out of my paycheck.?

I work at cold stone creamery.. Someone told me that our tips get taken out of our paycheck, so I looked and they do. I only make 6.50 and min wage is above that, so our "tips" are supposed to even it out and bring us up to like 7 bucks. Also, my boss splits our crews tips up. Say I work most of the day and I make 10 bucks in tips. Well if the other girls come in, they don't make anything, (even if they did it would still apply) my 10 bucks get split up between us all. I don't think thats fair.

Anyways..can someone explain to me how tips and tip taxing works? And how that comes out of the paychecks? AHHH HELP!

7 Answers

  • 1 decade ago
    Favorite Answer

    There will be nothing extra to account for your tips. It will be included on your W-2 form when you get it. There is no extra tax on tips. It is considered regular pay if it is included in your paycheck. If it is not included in your paycheck, then you would have to estimate how much your tips were throughout the year and pay taxes on them. But since your tips are included in your paycheck, you don't have to worry about that.

  • April
    Lv 4
    5 years ago

    I think you may be misunderstanding the paycheck stub. What you are probably seeing is the reported tip amount being added in so that taxes can be paid on the total earned income ( tips plus hourly wage plus commissions.) Then the tip amount is deducted back out since you have already received that money.

  • Judy
    Lv 7
    1 decade ago

    The law requires you to report all of your tips to your employer, and tax on your tips is taken out of your paycheck. Tip-pooling is legal, but you should only be charged tax on the tips you actually get to keep.

    The law also requires that if your total pay, hourly wage plus tips, doesn't equal at least the minimum wage for non-tipped employees, your employer has to make up the difference so you make at least the regular minimum wage.

  • 1M9
    Lv 6
    1 decade ago

    It may depend on where you live, for starters. I know that in some states, people in tip-earning jobs make FAR LESS in hourly wages, such as in Colorado. They actually make BELOW minimum wage, legally!

    In any case, here in CA employers must tax you 8% of your daily food sales as taxes on your assumed tips, even if you made only 5% in tips. When I was a server, I usually earned more than 15% every day but it still really sucked.

    Speak to your manager. If you're not making as much money as you need to make, ask for a small raise. In minimum wage jobs they usually only give you $0.25 per raise. If they won't, start looking for a new job where you can make more money.

    Source(s): 1M9
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  • 1 decade ago

    Federal taxation on tips started about 20 years ago---I believe that the deduction is 8% of your gross income; I know it isn't fair, because they apply this deduction to employees in the restaurant/hospitality industry while many other occupations that are accustomed to receiving tips are overlooked by the federal government........

  • 1 decade ago

    i have no idea but when i worked at olive garden, my tips were included with our paychecks (ive heard some restaruants don't do that so their tips are actually extra) i tried and tried to get ppl to explain all this stuff to me and no one would :(

  • gratutity which is the word for tips is taken out . it is not fair but the ;aw never is

    Source(s): me
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