Question by Rachel: How do you calculate the amount of tax you owe on tips? 10 points!?
Something is wrong, but my husband won’t believe me unless I bring him proof, so can someone please help me!!! My husband’s business (which does tip pooling) just started taxing the tips. Of course that’s fine. The problem is, the money they are taking out for “taxes” is the SAME as he makes in tips! That alone is wrong, but unless I know what they should be taking, my husband would rather believe these jerk bosses.
I live in Colorado.
10 points!
Best answer:
Answer by Pascal the Gambler
They are taxed as regular income.
What you are seeing is them adding them tips in, then calcualting the tax, then taking the tips back out b/c he already has them (he got the tips in cash, right?). He got the tips in cash in his hand, but they have to add the amount in to figure the right tax to withhold.
Know better? Leave your own answer in the comments!
Q&A: How do you calculate the amount of tax you owe on tips? 10 points!?
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