IRS Audits for Servers

How servers can avoid being audited by the IRS for underreported tip income and help for servers who are facing an IRS audit

Underreported tip income. It’s a problem the IRS has been trying to snuff out for years. And as a server at a restaurant, you can be sure the IRS will be paying special attention when you file your taxes.

The IRS believes hundreds of millions of dollars in tips simply aren’t reported each year. Whether this underreporting is intentional or not isn’t important to them. The simple fact that income goes untaxed is enough to draw an IRS audit, and it could land you in serious trouble.

Despite the fact that the IRS has gone on a public relations campaign to appear more friendly, you don’t want to end up in their crosshairs. Facing an audit alone is a stressful, confusing, and down right scary process.

Thankfully, there are things you can do to avoid this headache.

Get Educated- The first thing you should do is to educate yourself on tip reporting. Understand what your responsibilities as a server are, how to keep track of tips, and what the benefits of tip reporting are (higher Social Security benefits down the line). The bottom line is this: the more you know about your tip reporting responsibilities, the less likely it is that you’ll wind up in a showdown with the IRS.
Keep Records- Detailed records are the key to avoiding trouble with the IRS. By documenting your daily earnings, even if the IRS decides to look a little closer, you have a written record you can use in your defense. If they decide to audit you and you have no records, you’re in deep trouble. When it comes to tracking your tips, it’s better to be safe than sorry.
Seek Professional Help-The best thing you can do to avoid IRS audits is to work with a tax professional. Working with a professional who understands the ins and outs of tax code and the IRS will take the guesswork out of tip reporting. It’s a worthwhile investment that can save you time, money, and a lot of stress.

About Centsable Accounting

Whether you’re a server who needs help understanding tip reporting or you’ve found yourself facing an IRS audit, we can help. We’re Centsable Accounting, Inc., the leading tax problem resolution specialists. You don’t have to go it alone. Let our experience and knowledge face the IRS for you.

Contact Centsable Accounting, Inc., The Tax Problem Solvers today for all your tax resolution needs!