Tax Deductions for Food Service Workers
Tips are a big portion of income for those who work in the food industry, including waiters/waitresses, bartenders, busboys, hosts/hostesses, and sommeliers. Income made in tips can be confusing as you try to determine how it factors in at tax time, and what you have to report to the IRS.
Your employer will supply you with a Form W-2, Wage and Tax Statement at tax time, which will list all of your income and withholdings. Any tips you reported to your employer will be listed with your income in Box 1 of the W-2. Non-cash tips also have to be reported, including gifts or event tickets. Tips from your employer will be listed in Box 8, and this generally occurs when your employer is required to allocate tips to employees, or if you report less than 8% of your share of sales in tips.
Tips supplied by your employer are required to be reported on your tax return, almost always, as few exceptions apply. Medicare and Social Security taxes have to be paid on unreported tip income, calculated using Form 4137.
If you incur work-related expenses, you may be able to deduct the costs, which can reduce the amount you owe in taxes. Deductible expenses include:
- The cost and maintenance of uniforms, if they are required for the job and not suitable to be worn every day, like white service uniforms, but regular black pants and a white dress shirt don't count.
- Any costs for licensing or occupational taxes
- Required medical exams for the job that the employer did not reimburse
- Trade magazines and industry-related publication subscription fees
