Today TaxMama hears from Angela in Illinois, “I work in a salon and my boss is charging a 10% fee, or as he calls it “administration fees”, for us to receive tips on a credit card. Then our tips are given to us in our paycheck bi-monthly. So we are being taxed twice. I have a feeling this is illegal. I brought it to his attention. But I was dismissed, saying I was wrongly informed. I noticed you had a section on labor laws regarding gratuity for the state of California. Does this same law apply in Illinois?”
Dear Angela,
You’re smart. You’re a sharp woman.
And you have the same access to the Internet that I do. Do some digging in your Illinois employment laws and find out just what those laws say.
That’s what I’d have to do to learn about a subject like yours, when I know nothing about it.
One shortcut you can use is to put some of those phrases, along with “Illinois employment laws” into a search engine like Google or Yahoo! or something.
Or call the department of employment and ask them.
The facts? It costs your boss about 3.5% – 5% whenever someone charges something on their credit card. I understand him wanting to recover that.
But when he adds your tips to your paycheck, does he add in the full amount of the tips, or the amount less the 10% he charges you. He should only be adding the net dollars that you receive.
If he’s adding the whole thing in, and you’re not too incensed to leave and tell him where he can put his administrative fees… then, at least be sure to add them all up so you can deduct them
on your tax return as an employee business expense. Just make sure you get a written record of each administrative fee throughout the year.
Personally, I’d shop around for another job. Surely there must be someone in your town who’s not so unethical?
And remember, you can find answers to all kinds of questions about employment situations and all kinds of other tax issues, free. Where? Where else? At TaxMama.com
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