Will the IRS come after me?

Question

I just began waitressing at Pizza Hut as a second job. My main job is at a CPA firm, so I am in contact with the IRS on a regular basis. At Pizza Hut, they said that I do not have to claim my tips with them and they cannot force me to. So, if I never claim them and file my 2008 taxes will the IRS find out that I have been getting cash under the table and not being taxed on it?

Answer 1

and your a CPA?  We both know that you know that answer to that question.  If you don't report it and they catch you, you are going to have fines, penalities and fee's...not worth it babe.

Answer 2

They can't prove it.

Answer 3

You know the answer.  Legally you must claim ALL of your tips.  Pizza hut people are giving you wrong info and suggesting that you commit tax fraud.  The IRS is very aware that tips are an area where there is a lot of fraud, so has stepped up audits in that area.  Will they catch you?  Maybe, maybe not.  But is it really worth the chance?

Answer 4

I would only report $50 in tips....just in case someone from IRS is baiting you. If you claim nothing and an agent has tipped you...there is no way to say you didn't get tips. They have no way of proving how much you get...so no need to claim it all.

Answer 5

Pizza Hut gave you wrong information.

You must claim and report your tips as taxable income (ask a CPA at your office).

You must remember that the IRS is not like a court case where you are innocent until proven guilty. Your must prove your innocence. It is standard practice to receive tips in a restaurant, if you do not report tips they will know something is wrong. Restaurants with more than a certain level of employees must report an allocation of not only the credit card tips, but take that percentage of tips and allocate that also to cash sales.

Be safe, report the tips and pay the taxes. When you are caught, the penalty and interest will be far more than the original tax amount.

Answer 6

The fact that Pizza Hut doesn't require you to report the tips to them doesn't relieve you of reporting them on your tax return.  The IRS knows that certain jobs regularly receive tips over-and-above the salary reported by an employer.  If they decide to audit you, you could be in real trouble, not just for the year they audit, but for previous years as well.  The penalties could be significant.

Answer 7

Item 1 of Form W-2 states Wages TIPS and other compensation. Does this really leave anything to the imagination?

The Pizza Hut you work for should be figuring tax on allocated tips.