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Working for tips is hard enough. But the tax rules surrounding tips can make life even harder come tax season. Tips are optional payments that customers provide to employees—usually in the service industry. Many service industry workers falsely think that they don’t have to report their tips when they file their taxes. However, the IRS requires all tipped workers to report their extra earnings. If you are struggling to figure out how to report your tips, it could be helpful to work with a skilled tax professional. Here is some helpful information and tips on reporting your taxes.

Do I Need to Claim My Tips on My Tax Return?

Any cash and non-cash tips received as an employee are considered income and are thus subject to federal income taxes. All the following forms of tips are considered taxable by the IRS:

● Cash tips received from customers

● Tips left by customers on credit cards, debit cards, or any other electronic payment method

● Tip amounts received from other employers as a part of tip splitting or an informal tip sharing arrangement.


The only time you do not have to report tips is if the total tips you received during a single month is less than $20.

Your Responsibilities as an Employee

As a tipped employee, you have three main tax responsibilities regarding your tips. These include:


● Keeping a daily record of your tips.

● Reporting your tips to your employer—unless the total is less than $20 a month.

● Reporting all your tips on your income tax return.


Ensuring you follow these three responsibilities will ensure you don’t run into problems with the IRS.

Keeping a Daily Record of Your Tips

To keep a daily record of your tips, you can use Form 4070A. In addition to filling out this form, you’ll need to keep a record of the date and value of any noncash tips you get, which include any items of value such as tickets or passes. Although you don’t report these to your employer, you will need to report them on your tax return.

Report All Monthly Tips Totaling More than $20 to Your Employer

In accordance with the IRS, all employees must report all cash tips that total more than $20 per month. Cast tips also include any charged tips left on credit or debit cards along with tips received by other employees through a tip sharing or splitting program. There is no specific form employees are required to use for this report. However, your monthly tip statement should include the following information:


● Your signature

● Your name, address, and social security number

● Your employer’s name and address

● The month the report covers

● The total tips received during the month


Employees can use any form or document that includes these elements, such as Form 4070.

Report all tips on Your Income Tax Return

To report your tips, you’ll need to use Form 4137 to state the amount of unreported tip income to include as additional wages for your yearly income. These additional wages will be added to your Form 1040, which reports your income tax return and share of Social Security and Medicare tax owed on your tips.

Consult a Skilled Tax Resolution Attorney

If you are struggling to properly report your tipped wages on your tax return, it can be helpful to work with a skilled tax professional. Ensuring your tips are properly reported will save you from dealing with potential conflict with the IRS.


At Morgan Sebastian Law, Attorney Becky Sebastian is eager to help you navigate the complexities of your tax situation. We understand the challenges of paying taxes while experiencing financial hardship, and we are here to help you handle negotiations with the IRS. To schedule a consultation with an experienced tax resolution lawyer, call (877) 223-6605 or fill out our online contact form.


Tax season isn’t most people’s favorite time of year. But even if the thought of doing your taxes makes your head spin, it’s best to give yourself plenty of time to file—especially if you know your taxes may be complicated. Specifically, individuals who switched jobs in the middle of a tax year may have to be extra diligent about getting their W2 from their previous employer.


Your W-2 form is your wage and tax statement that outlines the total compensation you received from an employer in a given year, any contributions to retirement plans, health insurance cost, and if you claimed any deductions. Most people will receive their W-2 in January. However, if you switched jobs and have two W-2s, your previous employer might forget to send your form. In this scenario, it’s important to obtain your W-2 from your previous employer with enough time to properly file your taxes. If your taxes are complicated or you need help collecting your W-2s, it can be helpful to work with a skilled tax professional. Here are some important things to know about W-2s and how to get them from a previous employer.

Employers Must Follow the Legal Requirements of W-2 Forms

The IRS legally requires employers to send W-2 forms to both the government and their employees by January 31. Failure to do so could result in penalties for the employer. It’s important to note that this doesn’t mean that you must receive your W-2 by January 31. Instead, all W-2s must be postmarked by that deadline.

Be Sure to Review Your W-2 for Errors

Like all documents, it’s important to thoroughly review your W-2 for any errors. These mistakes could be small—such as an error in the spelling of your name—or notable—like leaving out a 0 on your compensation total. This process can be tedious, which is why it can be handy to have the help of a tax professional.

How to Get A W-2 From A Previous Employer

If you switched jobs and didn't receive your W-2 from your previous employer by Valentine’s Day, it’s important to take action. This process can be overwhelming and annoying, but it’s necessary to ensure your taxes are filed appropriately by the deadline. There is a range of steps you’ll need to take depending on how responsive your employer is. In general, obtaining a W-2 may be achieved through the following timeline:


1. Reaching out to your employer

2. Contacting your previous payroll administrator

3. Contacting the IRS directly

Reach Out to Your Previous Employer

Most people will be able to receive their W-2 by contacting their former employer. Start by asking an HR rep from your previous company for a copy. When doing so, be sure to provide them with an accurate address. Individuals who were working at a small business or startup that lacked an HR department may have to reach out to their former boss directly. Communicating with a previous employer can feel awkward and overwhelming. However, don’t worry about coming across as pushy. Your previous employer should be aware of tax laws and understand the importance of getting documents to you as soon as possible.

Contact Your Previous Payroll Administrator

If your previous employer does not send you your W-2 or you would rather not communicate with them, you may be able to get your W-2 by contacting your previous payroll administrator. You can do this by phone or email. You’ll probably have to confirm the details of your employment and verify your identity by providing information such as your address or bank info.

Contact the IRS

In the rare event in which the above methods are unsuccessful, you may contact the IRS directly. They will likely ask you for your employer’s identification number (EIN), which can be found on any of your past pay stubs. The IRS will then contact your employer and request the missing form.

Consult a Skilled Tax Resolution Attorney

If you are struggling to obtain a W-2 from a past employer, having a skilled tax attorney on your side can be a crucial resource. When it comes to W-2s, employers have legal responsibilities. A tax attorney can ensure that you receive the documents you need to properly file your taxes.


At Morgan Sebastian Law, Attorney Becky Sebastian is eager to help you navigate the complexities of your tax situation. We understand the challenges of paying taxes while experiencing financial hardship, and we are here to help you handle negotiations with the IRS. To schedule a consultation with an experienced tax resolution lawyer, call (877) 223-6605 or fill out our online contact form.


The IRS recently extended the tax deadline for 2021 to May 17. But what happens if you miss the new deadline? Whether you’re buried in a big project at your job or navigating a family crisis, the tax deadline can come and go in the blink of an eye. If you forgot to file your taxes before the deadline or didn’t request an extension, don’t panic! IRS agents won’t be showing up at your doorstep. However, it is essential to get in compliance as soon as possible. If you’re feeling too overwhelmed to navigate filing a late tax return, it can be helpful to work with a skilled tax attorney. Here are some steps to take if you forgot to file your taxes.

If the IRS Owes You a Refund

If the IRS owes you a tax refund, there won’t be any penalties for filing your return late. In fact, the IRS is happy to hold on to your money a bit longer interest-free. However, this doesn’t mean that you should take your time filing your taxes. You only have three years from a tax return date to claim your refund. After this period is up, unclaimed refunds are given to the U.S. Treasury.


While it may seem like it would be impossible to miss claiming your refund within the three-year period, millions of Americans do so every year. In fact, the IRS annually does a big media campaign—announcing the billions of dollars in unclaimed refunds for the year— to encourage delinquent filers to claim their money. In July 2020, the agency had a whopping $1.5 billion in refunds waiting for a total of 1.4 million delinquent taxpayers. All this is to say, it’s always best to not miss the deadline and procrastinate on filing your taxes. Many Americans are missing out on unclaimed refunds due to the simple dread of gathering their tax documents. If this is you, work with a tax attorney to ensure you get your refund.

If You Owe Money to the IRS

Conversely, you may owe money to the IRS. If you’re a taxpayer who is not expecting a refund, it’s even more crucial to file your tax return on time or if you miss the deadline, as soon as possible. Every day you miss the deadline is another day of delinquency for your return.The IRS charges interest and other penalties on your balance. In these scenarios, there are three types of penalties you may have to pay:


Failure to file penalty. This penalty is 5% of your unpaid tax bill. It’s important to note that this penalty will be reduced by the amount of the “failure to pay penalty” for months where both penalties apply. This penalty may be applied for every month in which your bill goes unpaid for up to five months.

Failure to pay penalty. This penalty is 0.5% of your unpaid tax bill. This penalty applies to every month (or part of a month) that your payment is late until your tax bill is paid or the penalty reaches 25% of the owed tax bill.

Failure to pay properly estimated tax. This usually only applies to freelancers or contractors who did not make the correct estimated payments to the IRS throughout the year. This penalty is calculated separately for each required installment using Form 2210. In some cases, the IRS will waive this penalty for a first offense or if you meet certain criteria.


The best thing you can do if you miss the tax deadline and owe money to the IRS is to get on top of the situation as soon as possible. As outlined above, continuing to put off your taxes will leave you with a much higher bill than you would have had otherwise. Working with a skilled tax professional is the best way to alleviate the stress of the filing process and ensure you don’t incur mounds of interest on your tax bill.

Consult a Skilled Tax Resolution Attorney

No one likes filing their taxes. However, filing your taxes by the deadline or soon after, is the best way to prevent amassing a huge tax bill. If you are struggling to gather your tax documents or navigate the filing process, it can be helpful to work with a skilled tax attorney.


At Morgan Sebastian Law, Attorney Becky Sebastian is eager to help you navigate the complexities of your tax situation. We understand the challenges of paying taxes while experiencing financial hardship, and we are here to help you handle negotiations with the IRS. To schedule a consultation with an experienced tax resolution lawyer, call (877) 223-6605 or fill out our online contact form.

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