Ask Dave
(Or, What does Jeeves Know?)
April 2001
Please send your questions to dave@dinersoft.com

Q. Dave

If I list $159. in tips for a week (part-time), can the employer add to that, say rounding to $175?

Bob & Renee

A.  Dear Bob & Renee

No, the employer can't add to that amount automatically. Generally how it is done is they allocate the amount under 8% of your total sales you failed to declare at the end of the year on your W2. However, some restaurants are setup on the good faith agreement with the IRS and have preset %'s for tips that have been previously agreed to. You will need to check with your employer to see if this is the case.

Some other hints:
If you worked a banquet where there is an automatic tip, then yes, your employer can tax you on that amount. 

Remember your employer doesn't know how much you tipped out nor do they know if you under-declared or over-declared the two weeks before so they shouldn't be declaring for you.

For the official word on allocation of tips, follow this link to the I.R.S.

Good tipping,

Dave