Whether the goal is to gain experience or earn some spending money or help pay for college, summer is the prime job season for teens and college students. This year, however, with the coronavirus pandemic, the job situation has not been as easy - not to mention that it is starting later than usual. Nonetheless, if you are a high school or college student (or the parent of one) who has been lucky enough to find summer employment, here's what you should know about income earned during the summer months
The short answer is yes, tips are taxable. If you work at a hair salon, barbershop, casino, golf course, hotel, or restaurant, or drive a taxicab, then the tip income you receive as an employee from those services is taxable income. Here are a few other tips about tips:
The Tax Cuts and Jobs Act (TCJA), enacted in December 2017, limited the itemized deduction for state and local taxes to $5,000 for a married person filing a separate return and $10,000 for all other tax filers. The limit applies to tax years 2018 to 2025.