Here's a Tip ...... about Tip Income

If you work in an occupation where tips are part of your total compensation, you need to be aware of several facts relating to your federal income taxes as outlined in IRS Publication 531.

First all tips received from customers are taxable income and must be reported on Form 1040. Tips are also subject to Social Security and Medicare taxes. The value of non–cash tips, such as tickets, passes or other items of value, is also income and subject to tax.

Total tip income includes all cash tips you receive directly from customers, tips added to credit cards, and your share of any tips you receive under a tip–splitting arrangement with fellow employees.