Got Tips? How to Keep Track for Tax Purposes
In the America’s booming service industry, tips are a cultural norm. If you’re one of the millions of workers that collects tips, you probably already know that reporting them properly is of utmost importance. But how do you keep track of all of the wads of cash? Learn our pointers on keeping your tips in line below.
Keep a Notebook
As old school as it gets, write it all down. This type of bookkeeping will certainly do in case of an audit, just make sure you have neat handwriting and keep it chronological. We recommend including the following information: date, shift, cash tips, credit card tips, total tip amount, tip-outs amount, and net tip amount.
Make a Spreadsheet
This is a better, more advanced version of the above. You can easily make a sheet for each month, organize it with columns and colors, and utilize Excel’s quick math formulas. This is also more secure if it’s on your personal laptop or device, and gives you the opportunity to save it in multiple places to ensure you don’t lose it.
Employ an App
Because of the amount of workers that make tips and the importance of tracking them, you better believe there’s an app for that. Tip Tracker, TipSee, Tip Counter – just pick your poison. The only restriction here is that it’s not as easy to use in the event of an audit, but you can always tap you tips into the app at the end of your shift, and use this as reference for your spreadsheet. Whatever helps you bookkeep properly!
Last tip on tips: make sure your employer subtracts tip-outs on your W-2. Many businesses like restaurants keep track of these numbers on their POS systems and ask you to report exact numbers, but double check your amounts match.
This form of bookkeeping may seem annoying, but you’ll be so thankful you did if a) the IRS audits you, or b) you need to discuss your wages with your employer due to something like a discrepancy in pay.