Working in Food Service and Paying Taxes

When you work in the food service industry, especially as a waitress/waiter, busboy, hostess, or sommelier, you may rely on tips as part of your income. This additional can get confusing at tax time, as you may not know what you are required to report to the IRS.

Whether you receive tips or not, your employer should provide you with a Form W-2, Wage and Tax Statement, which will document your and withholdings. Your employer will list tips your reported with your income in box 1 of the W-2. You are required to include any non-cash tips you receive, like gifts or tickets to an event. Tips from your employer will be reported on the W-2 in Box 8. Generally, your employer would allocate tips to you if you worked in a restaurant that was required to allocate tips to employees, or if the tips you reported were less than 8% of your share of sales.

Tips given to you by your employer must be reported on your tax return, with very few extenuating circumstances. You will likely be responsible for Medicare and Social Security tax on unreported tip income, which is calculated using Form 4137.

You can reduce your tax liability by deducting expenses that you incurred in relation to your job. You’ll need receipts to serve as proof for any deductions you claim. Deductions can include expenses you paid for:

  • Upkeep and cost of required uniforms, provided they aren’t suitable for everyday wear. In relation to food service, this can include white service attire or costume, but a basic white shirt, black pants and black shoes is not eligible for deduction.
  • Fees relating to occupational or licensing
  • Medical exams required by the employer which have not been reimbursed.
  • Subscription services to trade publications and magazines relating to your industry.