All the tips that you receive are income and are subject to Federal income tax. You must include in gross income all tips you receive directly; charged tips paid to you by your employer; and your share of any tips you receive under a tip-splitting, or tip-pooling arrangement. Reporting your tip income correctly is not difficult. You must do three things. 1) Keep a daily tip record. 2) Report tips to your employer, and, 3) Report all tips on your income tax return.
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