Tax tips on tips If you've started working as a food service employee, you might be wondering: Are tips taxable? The simple answer is yes, the IRS treats tips as taxable income. If you earn tips, then you're responsible for paying income, Social Security, and Medicare tax on that tip...
Here's the thing people might not understand. Social Security benefits cap out based on the maximum amount of Social Security tax contribution as well. It's not like someone who is making $500,000 gets FICA-taxed on all of his earnings and then gets capped on Social Security benefits. He...