Originally Posted by
Analise
How can that be? Is there a special W2 form, for waiters to submit to the IRS, geared specifically for the restaurant industry that has the restaurant populate on the form what the gross sales were (or is it net?) for the entire year at that particular restaurant or chain of restaurants?
I'd like to know from accountants and/or waiters themselves here on this thread. I'd also like to see that tax form too. Link?
Employees report tip income to the IRS on Form 4070 and are supposed to keep daily logs of tips, which are reported to the employer. See IRS Pub 1244 for details and instructions:
http://www.irs.gov/pub/irs-pdf/p1244.pdf.
The employer is required to withhold taxes on reported tip income. If the reported tip income is less than 8% on an allocated basis, then the employer must withhold taxes from the employee's paycheck as if the employee received on average 8% in tips. The information is reported on Form 8027 and the withholding on the tips (or imputed tips) is submitted to the IRS on a regular basis. See
http://www.irs.gov/pub/irs-pdf/f8027.pdf.
The employer can calculate imputed tips using one of 3 allocation methods: (a) actual gross receipts of customers served by each employee; (b) number of hours worked; and (c) good faith agreement with the employees for allocation of tips. For example, under method (a), if the employee served tables that ordered $5,000 of food in a given week, the employer would withhold tax based on the greater of reported tips or $400 (i.e., 8% of $5,000).