Mary has a job as waitress at a small restaurant. Tips are pooled in a jar and distributed back to employees at the end of each shift by the manager. These tips are not considered taxable income because they are funded by the patrons rather than the owner of the business.

Question

Quizplus · Accepted Answer

Tips received by employees are considered taxable income by the IRS, regardless of whether they are given directly by patrons or pooled and distributed by the employer.

Mary Has a Job as Waitress at a Small Restaurant