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Taxes on Tips for Self Employed

skillet

Are tips reported or treated differently than regular income for self employed. My housemate receives tips at her business. Cash tips she keeps track of. Credit tips are included in the sale. We might be able to estimate them; but there wouldn’t be a record.

A related question, should tips be reported separately from regular income on schedule C, and is there an advantage to doing that.

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Comments

MatthewD

Hello Skillet,

For a self-employed person, tips are treated the same way other normal self-employed receipts are. Report them on the Schedule C. They are subject to SE taxes, FICA and Medicare, just as if you were an employee reporting tips.

For me information see this IRS Publication on Tips.