posted
A few weeks ago, I picked up a second job waitressing. My bosses are great and took me on even though I didn't have any experience. However, I'm having a hard time getting any information from them regarding my taxes.
I've talked to other friends who wait tables and their restaurants handle things differently. Unlike their jobs, I don't report my tips to my boss. They get my sales numbers at the end of a shift but I'm not sure if this is something they record in order to report an estimate to the government.
Right now I'm concerned because, looking at my weekly paycheck from them for my hourly pay, I have negative numbers in my columns for Social Security, State withholding, and so forth. And I have a zero by Federal withholding.
I just don't know if I should be concerned. My bosses for some reason don't understand what my problem is. My dad is an accountant who does my taxes each year but next year I will likely be on my own and I really don't want to owe any money. My dad is kind of thinking that my refund from my other job might wash out whatever I owe for my waitressing job. But I'd prefer there not to be any surprises.
Has anyone waited tables at a restaurant that doesn't require servers to turn in their tip totals after every shift? What should I be doing to handle this so I don't end up writing a check come tax time?
How does the government even know how much to tax me? Is it likely that my job is reporting an estimate? Why do I have negative numbers on my pay stub?
Am I asking all the wrong questions? Am I worrying for nothing?
Posts: 1733 | Registered: Apr 2005
| IP: Logged |
posted
Obviously your job is different, but when I waited tables, I reported my tips, and they took out the taxes for my tips from what I was being paid in an hourly wage. I'm not sure of all the tax laws, but I believe they are required by law to pay at least part of your taxes, how your tips are handled I don't know, except that you do owe, taxes, Social security etc on 100% of your tips.
I don't know what questions to ask, your dad, as an accountant would have better questions to ask but it is definitely important to find out how you should be tracking your taxes and maybe even make estimated tax payments, since your job isn't taking any out. If you don't, you're going to have a HUGE tax bill next year.
I would suggest keeping accurate records, because I have heard (though not had any experience with this) that the IRS likes to audit restaurant wait staff, as they are notorious for not declaring everything they earn. It's important to accurately report how much you've been making for Social Security purposes as well. Your social security benefits if you have to go on disability are related to your lifetime earnings so be accurate.
It definitely sounds fishy to me though. I assume you had to fill out a W-2 making you an employee of the company. That would indicate that they had to pay at least part of your taxes for you, and it sounds like they are trying to get out of it.
Edit: I also had a ton of friends who waited tables at the time. I never heard of a restaurant that didn't require you to declare your tips. Even the little fish camps around here require it, and they're all privately owned.
Posts: 1214 | Registered: Aug 2005
| IP: Logged |
posted
tell them you INSIST on claiming 0 exemptions. It helps. Over all though you are responsible for reporting your income and paying the taxes. Your employer does NOT pay any for you.... they pay separate, unrelated taxes themselves.
Also...if you claim at least 7% of your gross receipts they won;t single you out for audit, at least any more than random. Less and it shows up as a red flag, and they can ASSIGN a tax to ALL employees at that job who are tipped, not just you.
It sucks. I pretty much claimed everything, but I still got hit with an additional fine/tax because of some idiots who didn't.
Posts: 15082 | Registered: Jul 2001
| IP: Logged |
posted
I would look into making estimated tax payments. It will help lower your bill at the end of the year. Or else, I would open a savings account and stash money there every month.
From the IRS website on Employment Taxes (this is for businesses):
quote: You generally must withhold federal income tax from your employees' wages. You withhold part of Social Security and Medicare taxes from your employees' wages and you pay a matching amount yourself. To figure how much to withhold from each wage payment, use the employee's Form W-4 and the methods described in Publication 15, Employer's Tax Guide and Publication 15-A, Employer's Supplemental Tax Guide (PDF).
So, assuming you filled out a W-2 form, your employer should be paying a portion of your Social Security and Medicare. The rest you pay yourself.
If they aren't going to have you declare your tips, then you need to either make estimated tax payments or set up an account that you pay into to use to pay the taxes come next spring. If you can be disciplined about saving and not take it out of the account for other things, you can save it and write a check next spring, and at least earn interest on the cash until then. If you can't be disciplined about saving, your best option is to make estimated tax payments. Your dad, as an accountant should have information on setting those payments up for you.
Posts: 1214 | Registered: Aug 2005
| IP: Logged |
posted
Tips – Withholding and Reporting "Your employees who receive tips of $20 or more in a calendar month, while working for you, are required to report to you the total amount of tips they receive. They must give you written reports by the tenth of the following month...Employees must report to you tips received directly from customers, tips from other employees, and tips customers charge to their bills. Service charges added to a bill and paid to your employees are not considered tips for tax reporting purposes. These service charges constitute wages for purposes of social security, Medicare, and income taxes"
posted
They pay none of the income tax for you, I should have said. My mistake.... they DO pay Medicare and SS taxes in part, about half IIRC.
Posts: 15082 | Registered: Jul 2001
| IP: Logged |
Printer-friendly view of this topic
