Tax Tips on Tips from Mario Batali

Image via mariobatali.com

Celebrity chef turned talk show host Mario Batali pasta-been in hot water until his Orange Crocs, but not for the water about undercooking or salting-the pesto.?Nope, primavera was the scandal over allegations he illegally confiscated tips of his employees.?Talk about eating someone else's plate!

According to a lawsuit brought by more than 1,000 employees, and business partner Joseph Bastianich, Batali skimmed tips confiscation of 4 to 5% of all tips made of wine sales. This part of the Batali and medium-sized tip money was supposed to go to "wine research" and replacing broken glasses. See Batali agrees to $ 5. 25 M Server-Tip Suit Accord.?Sounds logical, perhaps especially in the world of chef-eat-chef of competitive dining.

The suit alleges, however, that the tip jar just went in Batali of inflated bags. What a Croc!?Smoothing it out like warm chocolate sauce $ 5.25 million Batali, agreed to pay to settle on the suit.

Talk of tips calls on both employment and fiscal rules, so here are 10 tips on tips:

Tips belong to the employee. Tips are to be retained by the employee and the employer can not take.?But see # 2 below.Tip pooling is allowed.?Employees who regularly tips (waiters, bartenders and bus boys receives) can pool their tips. Chefs, dishwashers and management can not.Service costs are not Tips. Chefs, dishwashers and management can you receive only a portion of the mandatory service charges. These are not deemed so tips can be divided as the employer sees fit.Tips are taxable. Employees should claim all tips as income. This includes tips that the employer pays more than to workers for free customers and employees receive tips directly from customers.They are wages.?Although employees receive tips from customers, they are generally tax withheld by the employer.Employees must sign. Workers report tip income on form 4070, employee's car report of Tips to employer. Signed this report, because of the 10th of the month following the tips received shows are:

? Service car name, address and social security number;

? Employer name and address;

? The month or period; and

? Total tips received. (No report is required for months when tips are less than $ 20.)

Employer reporting. Employers must collect income tax, employee social security tax and Medicare tax on tips employee reported by workers. Not to pay employment taxes resources see personal liability. The employer may collect these taxes from an employee wages (remember surplus quantities of wages to allow the tips).Allocation of Tips.?Employers must ensure total tip income reported at least 8% of the total revenue for that pay period. If that is not the case, the employer rejects the difference between actual tip income reported and 8% of gross revenue.IRS Form W-2. The amount of the income of the tip assigned to each employee displayed in box 8 of their form W-2 for the year.Tip reporting.?Employers that great food or drink must submit Form 8027, employer establishments of back of Tip income and allocated Tips information annual report, employee tips.

For more information, see:

Settles for $ 5 million Batali wage lawsuit

Tax Tips-Restaurant

Employee Benefits-Restaurant Tax Tips

IRS Publication 1244, employee's Daily Record of Tips and report employer car

Employers who violate tax law could go to jail

IRS nightmare: which tax on labor?

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