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Tracking income taxes off tips for small taproom

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  • Tracking income taxes off tips for small taproom

    Good morning brewing friends!
    We have a small taproom that consists of 5 employees, 3 of which are part time. We only have 9 employees in our entire company. I'm trying to figure out how other small breweries like us are tracking tips for tax purposes. We are a California brewery, so California state laws apply. Currently, we have been tracking the credit card tips and dispersing them at the end of the year to our employees to claim on their taxes. However, I'm being told that if we are doing that then we are supposed to be reducing each employees weekly paycheck based upon the additional income they received and subtracting the additional payroll taxes from that pay period. In certain cases at other restaurants where they track their tips this way, an employee could have a negative paycheck at the end of the week if they earned a lot of tips.
    I was wondering if anyone had any insight on what you guys are doing out there and if you could share any legalities regarding tracking and reporting tips that you may have learned along the way. So far, every person I speak to about this issue does it differently and everyone interprets the law differently. Thank you in advance for your help!


    John Hutchings
    Fall River Brewing Company

  • #2
    We include and pay any CC tips with each paycheck. Cash tips SHOULD be recorder with each paycheck also.
    IRS will want the taxes owed on that income paid at least quarterly, but probably with each pay period depending on your filing requirements.

    Sent from my SM-N900V using Tapatalk
    Eric Brandjes
    Cole Street Brewery
    Enumclaw, WA