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Tax Filing Tips
The most frequently asked tax questions related to Tax Filing Tips
For Tax Payers
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If you are under 50 you can put up to $5,500, Over 50 you can put up to $6,500.
For self-employed. the 25% refers to the self-employed worker's "net earnings" from the business. The net result of the math is that the 25% limitation on "net earnings" works out to 20% of your adjusted profit after the self-employment tax adjustment in a Simplified Employee's Pension Plan. Self- employed individuals can even take the deduction on their 2016 tax return and fund the pension plan as late as six months from April 18, 2016 if they file for an extension to file their return.
The penalty amount is in addition to the taxes you owe.
You can avoid this penalty if you can show reasonable cause for not reporting the tips to your employer.
To do so, attach a statement to your return explaining why you did not report them.
Tips of less than $20 are not reportable to the employer and not subject to FICA tax But are subject to income tax.
Give your report for each month to your employer by the 10th of the next month. If the 10th falls on a Saturday, Sunday, or legal holiday, give your employer the report by the next day that is not a Saturday, Sunday, or legal holiday.
To report these taxes, use Form 4137, Social Security and Medicare Tax on Unreported Tip Income, to figure these taxes.
The unreported tips must be included as Wages on Form 1040, Line 7.