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The Hows of Taxes

Module 2: Wage and Tip Income

 

Photo of a restaurant server holding plates of food
All income from wages, salaries, and tips is taxable. Wages, salaries, bonuses, and commissions are compensation received by employees for services performed. Tips are received by food servers, baggage handlers, hairdressers, and others for performing services. Wages, salaries, bonuses, commissions, and tips may be in the form of cash, goods and services, awards, and taxable benefits. Use the resources below to learn more about wage and tip income.

materials:

Tax Tutorial
Tax Tutorial: Wage and Tip IncomeLearn how taxable wage and tip income is reported.
Fact Sheet
Fact Sheet: Wage and Tip IncomePrint this fact sheet on wage and tip income.
Simulation
Simulation 2: Using Your W-2 to File Your 1040EZHelp Cicely King, an athletic trainer, complete Form 1040EZ.
Assessment
Assessment: Wage and Tip IncomeReview your understanding of wage and tip income.
skill check:
Check your understanding of wage and tip income. Indicate whether each of the statements below is true or false by clicking on the correct answer. To assess your answers, click the Check My Answers button at the bottom of the page.
  1. Food servers do not need to report tips as taxable income.
  • A.
  • B.
  1. Hairdressers include in taxable income the tips they receive from customers.
  • A.
  • B.
  1. Employers use Form W-4 to report wage and tax information to employees.
  • A.
  • B.
  1. Tips can be received in the form of money or goods.
  • A.
  • B.


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