Tips and Gratuities

For employers with employees who rely on tips as part of their income – restaurants, hair and nail salons, other service industries – it’s important to understand gratuities and how the Internal Revenue Service (IRS) expects them to be reported. Is there a difference between tips and gratuities? A gratuity can take the form of either a tip or a service charge. Tips are discretionary (optional or extra) payments that a customer gives to an…