Tip Income Definition

Tip Income Definition

Tip income is tips received directly from customers. This can include cash tips or tips charged to a debit or credit card.

Extended Definition
Employees must report all of their tip income to their employer. The employer is then responsible for withholding federal, state, and local taxes from the tip income. Tip income does not include service charges, like bottle service charges or large party charges.

Related Article
How to Report Tip Income and Withhold Taxes