As the due date for filing your 2017 taxes approaches, it’s important to make sure that you are accounting for all of your income, even tip income. Many people are under the impression that tip income isn’t taxable because it’s not always formally reported or tracked. However, in the eyes of the IRS, tips are definitely taxable! Plus, reporting tip income on your taxes is in your best interest in the long run. Read on to find out more!
Build a Strong Financial Picture
If you receive tips at your job, you may well make more in tip income than you do in wages. Even if that’s not the case, your tip income can still add up to a significant portion of your pay.
When it comes to big financial moves like securing credit or applying for a mortgage, it’s in your best interest to have the full amount of your income show up on your financial records. How much credit a lender extends to you may well be dependent on how financially viable you are on paper.
Safeguard Your Financial Wellbeing
On the other end of the spectrum, it’s possible, at some point, that you may need to apply for unemployment or disability benefits. While we all hope this never happens, it’s better to be safe than sorry!
Part of “being safe” means accurately reporting your full income on your tax return. This way, if you need to apply for benefits, you have an official record of the amount you actually make. If you don’t report your tip income, you will only be eligible for benefits based on the income you reported.
Not only is reporting tip income the law, but it also serves your best interests in the long run. To find out more about tip income and your taxes, contact the pros at Taxation Solutions, Inc. We are your source for tax information and guidance in Virginia Beach and the surrounding area. Give us a call today to find out how we can help you navigate tips and your tax return!