Does Enabling Tip Importing Take Out Taxes?

[dsaxena_pdx]

Not sure if this is the right board to ask but I figure lot's of people in the food world deal with this. I'm using Square Payroll to pay my employees and love it though one big issue I'm dealing with is accounting for credit card tips. Right now my employees cash out their CC tips at the end of shift, which makes my cash deposits not match my cash sales. I'm considering using the Tip Importing function in Square and wondering if I do this, will the tips just show up as 100% on the employees paycheck and they will be responsible for taxes on that or does it get treated as normal income - i.e, automatically taxed and I end up paying for FICA stuff?

Thanks!

[Chad]

Hello @dsaxena_pdx! 

Imported tips will be taxed like normal wages, so employees won't need to file extra for those. Also since they are taxed, they won't be paid out 100% on your employees check. 

If you still have questions, please feel free to @ mention me. 😃

[Eddie3]

i have been paying my employee cc tips once a week but i think im paying more in taxes for them because i do not do that. will i be able to import the tip total while still giving them cc tips once a week? or do i just need to keep the tips on the payroll? please let me know if you have any info on this please

[PerkyCup]

Eddie,

If I understand you correctly you are reporting the CC tips when you run payroll.  Square will then add to the hourly wages the amount of CC tips earned and you are taxed on the total.  Be sure you are using the appropriate column and that you have NOT already paid them out in cash.  I only report the amount and do not have Square add to wages (I cash out CC tips nightly).  I made the mistake of using the wrong column and paid out tips twice!

Unfortunately for us owners, we have to pay taxes on the CC tips as well as income.  Some people deduct the cost incurred for collecting CC tips from the gross tip but that is the only reduction that is allowed.  Your state may not even allow that (double-check with your State).