income tax question for waiters: Is tip share tax deductible?
The complication here is when you get credit card tips. If you have cash tips, it’s easy – you declare the amount you actually received as tip income (so whatever the people give you minus whatever you tipped out). This is because cash tip income is almost never on your W-2. Credit card tip income, however, usually is. So, for example, if you get $200 in credit card tip income, but you tipped out your busboys $50, you need to know how to handle it. Essentially, if you have received $500 in cash tips and $500 in credit card tips, and have tipped out your busboys $200 of that, then you claim $800 in tip income on your tax return. Of course, this is assuming you are one of the honest ones and even declare your cash tips on your tax return. Many people simply enter in the total dollar amount of the tips listed on the W-2 and do not declare cash tips. If you are thinking about trying to take a deduction from the amount on your W-2, I don’t think there is anywhere that you can claim that – b
