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What do I do with unreported cash tips on my taxes?

What do I do with unreported cash tips on my taxes? Topic: Tips on writing letters
July 16, 2019 / By Blossom
Question: I'm a 21 year old and had my first waitressing job this summer. I worked at a bar this for about 2 months and was never properly trained. We always reported our credit card tips and then used cash tips to tip out, etc. I don't remember ever reporting cash tips to the bar though. I kept track of my cash tips on my own but I'm wondering what to do now that it's tax time? I know that in Turbo Tax I can report it under 'unreported tips' but do I also need to fill out IRS Tax Form 4137 as well?
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Best Answers: What do I do with unreported cash tips on my taxes?

Aisling Aisling | 8 days ago
1040 with form 4137. If using software, Turbotax will automatically fill in the 4137 for you. Note, you should write a letter and attach it to explain why you failed to report all of your tips to your employer--this helps you stave off a 50% penalty. You may discover that your W-2 has "allocated tips" on it--if they do, you are expected to have records to show the correct amount if different.
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Aisling Originally Answered: I'm a nanny and get paid in cash. What do I need to do to pay my taxes?
The term "nanny" implies that you are working in the home of your charges. Therefore you are a Household Employee by law. Your employer is required to withhold Social Security and Medicare taxes from your wages, pay federal and state payroll taxes, and provide you with a W-2 at the end of the year. They are not required to withhold federal income taxes (but may be required to withhold state income taxes) but may do so if you both agree. If they do not withhold income taxes, you will need to estimate your tax liability and make quarterly estimated payments using Form 1040-ES http://www.irs.gov/pub/irs-pdf/f1040es.p... . The instructions will help you estimate your tax liability, but subtract out the self-employment tax as it will not apply in your case. If your employer refuses to withhold FICA taxes, show them a copy of IRS Pub 926 http://www.irs.gov/pub/irs-pdf/p926.pdf and tell them to get with the program. If they still refuse to withhold tax, file a Form SS-8 http://www.irs.gov/pub/irs-pdf/fss8.pdf with the IRS to get a formal ruling on your status. If that is not resolved by next year's tax season (it should be if you file it NOW) then file Form 1040 and show your earnings on line 7 as if you had received a W-2. Attach Form 8919 to your return to calculate your share of the FICA taxes. Use reason code 'G' in column 'c.' File your return and get good with the IRS with what you owe. Your employer will receive a large bill for their unpaid payroll taxes, plus penalties that will probably total about 150% of the tax that they owe.
Aisling Originally Answered: I'm a nanny and get paid in cash. What do I need to do to pay my taxes?
"Bash" has nailed it 100%. The only thing that I could add is that how you are paid is irrelevant to the situation. Some employers do pay in cash and it's perfectly legal, however they still must withhold the necessary taxes from your pay, pay their payroll taxes, and give you pay stubs for each pay period that shows the gross wages and how much was withheld from each tax. As a household employee you don't have the legal option to file as self-employed as at least a couple of uninformed respondents have suggested. I've been involved in a few audits where the employer tried to treat them as self-employed and it backfired in the employer's face -- badly and expensively I might add.
Aisling Originally Answered: I'm a nanny and get paid in cash. What do I need to do to pay my taxes?
Unless you have other nannies working for you, you don't need an EIN. By law, most employers of nannies are supposed to withhold taxes from their nanny's paychecks. If they don't you would file a Schedule C for your income and Schedule SE for Self Employment tax. These would be attached to your regular 1040. Then, in the above situation, you would pay your taxes quarterly to the IRS on April 15, June 15, Sept 15 and Jan 15. You would do that using form 1040 ES. If you still more help, see www.irs.gov
Aisling Originally Answered: I'm a nanny and get paid in cash. What do I need to do to pay my taxes?
The IRS will consider you to be a household employee. The family that pays you should be with holding taxes from your pay-even if they pay you in cash. They should also be giving you a statement each payday showing the gross wages,net pay and all with holdings for the pay period. If they are not,then you should be keeping a record of your wages and set about 20% aside for taxes. You can file as an "independent contractor",you will be responsible for paying all your taxes. You should contact the local IRS office for specific information and what records you need to keep. Using the tax calculators in your financial program may help you keep on top of your tax obligation. They should also give you a W-2 or a 1099 by Jan. 31 so you can file your taxes.

Aisling Originally Answered: Taxes, taxes, taxes to pay for health care - which are your least favorite and favorite proposed taxes?
My least favorite tax right now is the one on employer-provided health insurance. I am already in the same tax bracket as Warren Buffett, Bill Gates, and their pals. They don't need my money. I need my money! My favorite tax right now would be the tax that would fall on corporations whose sole business is to make Americans sicker than they already are. If people want to become sick, they should buy the high-priced policies up front.
Aisling Originally Answered: Taxes, taxes, taxes to pay for health care - which are your least favorite and favorite proposed taxes?
you know these are joke taxes, right? Can you see the Rep from the county that has Disneyland, voting to tax pop and cotton candy? and what is the point of giving health care to those who don't have it while you make those who do, pay income tax on it and by the way, if it is included in income for tax purposes, it will be included in the Soc Sec/FICA/Medicare base. That tax will go up, rather will come out, out of your pocket. What part about keep your hands out of my pocket and stop spending does the Obama Administration not understand? California is run by Dems and look at the mess they are in, we don't want the US to follow suit. Will it take the elections of 2010 to stop this madness??
Aisling Originally Answered: Taxes, taxes, taxes to pay for health care - which are your least favorite and favorite proposed taxes?
*sigh* Keep on buying into that propaganda. Luxembourg is the RICHEST country in the world and UHC works for them and every other industrialized nation other than you guessed it, the US. I don't drink soda because it's fatty.

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