Employee Tips

[Anonymous]

I have a question regarding employees claiming tips through payroll. When I enter their tips received while running payroll, will they get paid for those tips in their paycheck or do the taxes just get deducted for those tips? As it stands, my employees currently reimburse themselves with cash at the end of their shift for credit card tips and keep cash tips as well. It is their responsibility to claim those tips at the end of the year when filing taxes. We want to streamline and just do it up front for them in their paycheck, but I don't want to cause a problem when we transition to this because of the current method. IF they take cash home, then we enter the tips during payroll, will they get paid again for the tips they already took or will just the taxes be deducted from their regular pay? Any info would be appreciated.

[Anonymous]

Hello, SOJAX.

Thanks for the detailed information you’ve provided about your concern.

Tips in QuickBooks Online should be recorded every paycheck schedule to avoid double payment. However, in this situation, you can create a separate paycheck to only deduct the taxes (Just don’t issue this paycheck to your employee).

For more information about tips in paychecks, please check this article: https://quickbooks.intuit.com/community/Reports-and-accounting/How-to-record-a-tip-and-add-tips-on-t....

You’re always welcome to visit us again if you have other concerns about QuickBooks.

[MryAllnCnsltg]

Hi SOJAX,

If using QuickBooks Desktop software to process payroll, you will need to set up two payroll items to handle the taxation and reporting of the tips — Tips Addition and Tips Deduction.

• Tips Addition payroll item is set up with a Tax Tracking Type of Reported Tips
• The Tips Deduction payroll item is set up with a Tax Tracking Type of None
• The Tips Deduction payroll item must be set to deduct from Net Pay

To set up taxation of cash tips in QuickBooks Online, add the additional Pay Type of Cash Tips to the employee payroll record. When adding a new employee, choose the Additional Pay Type “Cash Tips”

All of the above are for tips that the server has already received in cash. This includes tips picked up off the table and credit card tips that were paid out in cash at the end of the night.