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Palestra Financial

 

1904 Duck Slough Blvd

Trinity, FL 34655

 

Phone: (844) WHY-PLAN™

 

Website: www.PalestraFinancial.com

July/August 2022

Working For Tips

Under federal law, employers must pay at least $2.13 per hour, as long as the hourly wage combined with the tips received equals the federal minimum wage of $7.25 per hour or more. If not, employers must make up the difference. Keep in mind that many states require a higher hourly wage for tipped workers.


Community Tip Pool
Tip pooling is when the tips collected are put into a large “pool” and redistributed among a larger group of employees. Usually, a distribution rate is set by the employer and includes employees who don’t customarily receive tips like dishwashers, chefs, and cooks.

Employers, managers, and supervisors are prohibited from keeping employees’ tips. Like pay rates, states have their own rules for tip pooling that may go beyond the federal requirements.


Reporting
All cash tips are subject to Social Security, Medicare, and income tax. Employees are required to report monthly tip totals to the employer for tax reporting and withholding. Employers must retain tip reports, withhold taxes on the hourly wage and tip income, and deposit the tax with the IRS. In addition, employers are also responsible for paying the employer’s share of Social Security and Medicare taxes.


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Securities offered through J.W. Cole Financial, Inc. (JWC) Member FINRA/SIPC. Advisory services offered through J.W. Cole Advisors, Inc. (JWCA). Palestra Financial and JWC/JWCA are unaffiliated entities.

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