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ITG FAQ #4 Answer-How are tips treated for employment tax purposes?

Tips of $20 or more that an employee receives in a calendar month while working for any one employer are subject to FICA, FUTA (which is now optional; see Announcement 2001-16, 2001-8 I.R.B. 715) and federal income tax withholding. Tips of less than $20 received by an employee in a calendar month while working for any one employer are not subject to FICA, FUTA, or federal income tax withholding.

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Page Last Reviewed or Updated: 17-Nov-2016