From: Fort Myers, FL

Dear TaxMama,

I work for an hourly wage and tips.

I keep a careful daily log of my tips.

At the end of the year, if my employer doesn't feel that I have claimed enough on tips, and they want to insure that they've paid enough on their tax portion, they will increase the claimed gratuities on my W-2, above what I made.

Is this legal?

Thanks for your time!

Lindsey

 

 

 

Dear Lindsey,

IRS sets a percentage that employers must add to wages to account for tips. It's an approximate amount for employers to use, when employees don't keep daily logs.

However, if you're keeping a detailed, daily log and you turn that in to your employer, he ought to be able to use that to report your tips.

IRS Publication 531 explains how to keep the daily record using a booklet IRS prints out called Form 1244

You can get the actual booklet from IRS by calling their forms line at 1-800-TAX FORM (800-829-1040). In fact, request a dozen, so you have one for each month.

Make a copy for your own file. And give your boss the original every month.

Remind your employer that the tips you're reporting are only the tips you get to keep, after you've shared the money with hostess, and kitchen staff. That's all that should be included on your W-2.

If you sign that booklet each month and give it to him, he's off the hook as far as IRS liability for your unreported earnings goes. He shouldn't be adding any more income just because HE feels it ought to be more.

Good luck!

Best wishes,
Eva Rosenberg, MBA, EA