Fort Lauderdale Cocktail Waitress Tax Lawyer Providing Legal Services and Tax Preparation Help for Clients in Florida
Florida’s full-service restaurant industry is estimated to be the 4th largest in the nation, with over 40,000 restaurants across the state, generating billions of dollars in revenue every year. The majority of people employed in front-of-the-house positions in Florida bars and restaurants are tipped employees. Learn what you need to do if you are a tipped employee when it is time to file your taxes and how a tax attorney may be able to help.
How Should Restaurant Servers File for Taxes?
Filing taxes as a cocktail waitress or restaurant server is not very different from filing taxes as any other type of W-2 employee, but with one major distinction. Most servers receive tips to supplement their hourly wages, which are usually below the Federal or State minimum wage hourly rates if comparing them with what a non-tipped employee would receive.
Your tips should be reported as income along with your regular hourly wages if you receive more than $20 a month in tips. Typically, your employer will include on your W-2 any credit card tips you may receive, but it is mainly up to each employee to report any cash tips. To do so, you may use IRS form 4070. It is also recommended to get the help of a qualified professional to prepare and file your tax return.
What Are the Florida Laws for Tipped Employees?
As stated above, tips that are over $20 a month are considered taxable income, meaning you need to pay income taxes on them as well as Social Security and Medicare withholding. Any payment voluntarily provided by a customer that is over the amount charged for products and services is considered a tip.
Some establishments add a mandatory service charge to every customer’s bill. Even if part of the money collected as a service charge goes to the employee, money collected in this manner is not considered to be a tip and thus is counted towards the server’s hourly wages. For tips received via credit card payment, the employer is allowed to discount any credit card processing fees from the total tips an employee may receive before transferring the tips to that person.
What Happens if a Server Does Not Report Their Tips?
The bottom line is that tips are wages, and if you receive more than $20 in tips every month, the IRS expects you to report it to your employer. If you have tips (including cash tips) that you have not reported to your employer, you may include them in your own tax return as other income reported.
Establishments where tipped employees are clearly not reporting all their cash tips could be at risk of being audited by the IRS. There are also penalties that could be levied by the IRS for not reporting tips in any amount or reporting less than what you actually received. Usually, those penalties may amount to half of what you would have paid in Social Security and Medicare taxes if you had reported your tips.
Why Should Cocktail Servers Work With a Tax Attorney?
Sometimes, when you are trying to save money and just get your tax return done, you may get the help of a friend or colleague who claims to be able to prepare and file your taxes for you for free or cheap. This is often a risky proposition, as working with someone who is not a qualified professional can often result in a tax return that has incorrect information or serious mistakes.
All too often, tax returns from hard-working people such as cocktail waitresses and restaurant servers get flagged and audited by the IRS. As a result, you may find yourself paying a bigger tax bill than expected, on top of potential penalties and interest. It is best to rely on a professional who understands tax laws as applicable to tipped employees in Florida and can prepare your tax returns in the best and most accurate way possible.
The Law Office of Ray Haselman not only focuses on solving IRS tax problems but also helps prevent them by providing tax preparation services for a wide variety of professionals in the hospitality and food & beverage industry in Fort Lauderdale. With the restaurant industry having taken a hit due to the recent pandemic and endless restrictions and mandates from the government, many restaurant workers have been struggling financially. The last thing you want to be dealing with is the IRS coming after you with a big tax bill.
Our legal team can ensure your taxes are done right the first time. If you are facing a tax issue, Attorney Ray Haselman has the knowledge and skills to help you achieve a favorable outcome with the IRS. Whether you are being audited because the IRS says you did not report your tips correctly, or you are dealing with issues due to not filing a tax return because you were afraid you wouldn’t be able to afford your tax bill, Attorney Ray Haselman has assisted countless restaurant workers in the Fort Lauderdale area who were dealing with a similar predicament.
Whether you are looking for tax preparation, dealing with a tax problem, or you simply have questions, feel free to reach out to the legal team at the Law Office of Ray Haselman in Fort Lauderdale. Simply call us at 786-522-0410 and request a free initial consultation to discuss your case, get answers to your questions, and learn your options.