Employee Tip Reporting

If you own a restaurant or bar, please read on.

The annual tip reporting form will be due to IRS next February.  I prepare that form for most of  you.  On that form, the amount of tips your servers reported during 2023 will be reported. Also reported will be your 2023 sales.  IRS wants to see that at least 8% of sales were reported as tips. If that report doesn't show at least 8%, you can be subject to additional reporting to IRS and may have to "allocate" the shortfall to all servers, by amending their W2 (employee income) forms.  This is a complicated and costly process and if possible, should be avoided.

I point this out now, so that if your tip % is under 8%, you have an opportunity between now and 12/31 to increase what's being reported.

If you have questions, please let me know.