Question by Rob: How much tax do you pay on tips?
I have just started working as a hairdresser in a salon. What percentage of my tips should I save for taxes?
Best answer:
Answer by Robert in Nuuanu
The best way to handle tips is to report them to your employer for inclusion in your W-2. (Your employer cannot refuse to do this.) That way the proper amount of tax is withheld in accordance with your W-4 exemptions for your salary, and Social Security and Medicare tax is also withheld correctly.
It is important for workers with occupations receiving tips to report them so they are properly credited for Social Security and can collect when they retire.
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How much tax do you pay on tips?
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