Tip Income

AAA

DEFINITION of 'Tip Income'

Income that a service professional earns that is not part of a regular wage. Tip income can come from a gratuity left by a customer at a restaurant, money received by a porter for carrying luggage to a hotel room, or from other activities that are not covered by the employer. Tip income can be considered a secondary form of income.

INVESTOPEDIA EXPLAINS 'Tip Income'

Some businesses, such as restaurants, assume that employees will earn tips and will thus provide a lower hourly wage rate. If an individual collects tips over a given amount during a calendar month, it must be reported to the employer and to the government, since taxes have not been withheld like they are for normal income.

RELATED TERMS
  1. IRS Publication 1244: Employee's ...

    A document published by the Internal Revenue Service (IRS) that ...
  2. Form 4070: Employee's Report Of ...

    A tax form distributed by the Internal Revenue Service (IRS) ...
  3. IRS Publication 531

    A document published by the Internal Revenue Service (IRS) that ...
  4. Gambling Income

    Any income that is the result of games of chance or wagers on ...
  5. Personal Income

    Total compensation received by an individual. Personal income ...
  6. Exempt Income

    Certain types or amounts of income not subject to federal income ...
RELATED FAQS
  1. What's the average hourly wage of waiters and bartenders before tips

    As of 2015, the federal minimum average hourly wage for waiters and bartenders is $2.13 per hour before tip income is included. ... Read Full Answer >>
  2. How reliable or accurate is marginal analysis?

    Marginal analysis is designed to show how economic reasoning allows actors to accomplish more by understanding limits on ... Read Full Answer >>
  3. What is the difference between a principle agent problem and moral hazard?

    Principal-agent problems and moral hazards are related in that one gives rise to the other. Principal-agent problems occur ... Read Full Answer >>
  4. How does agency theory propose to deal with the agency problem?

    Agency theory highlights potential problems that may occur when agents and principals have different interests. Principals ... Read Full Answer >>
  5. What are some ways employers can reduce employee turn over?

    Employers can reduce employee turnover through the use of certain hiring practices, management methods, compensation, benefits ... Read Full Answer >>
  6. How does Jeff Weiner make money from LinkedIn?

    LinkedIn CEO Jeff Weiner creates revenue for his company from user subscription fees, advertising and marketing operations, ... Read Full Answer >>
Related Articles
  1. Taxes

    Should You File An Early Tax Return?

    When it comes to filing your taxes, it can often pay to wait until the deadline.
  2. Taxes

    Personal Income Tax Guide

    If the sight of your W-4 has you in the doldrums, read on to learn how to beat the tax blues.
  3. Entrepreneurship

    Get the Best Freelance Rates for Your Work

    Smart strategies for estimating costs, researching fees, pricing projects and getting your rate for a range of clients.
  4. Investing

    What are Preference Shares?

    Preference shares, also referred to as preferred shares, are equity shares that give the shareholders certain rights ahead of common shareholders. For instance, when the corporation declares ...
  5. Retirement

    Pages From The Bad CEO Playbook

    Excess compensation, golden parachutes, tunneling and IPO spinning make these bad executives even worse.
  6. Retirement

    5 Lesser-Known Retirement And Benefit Plans

    These plans aren't widely used, but they fill a specific niche for employees in certain situations.
  7. Insurance

    Trending Toward Asset-Based Management

    Will charging fees instead of commission increase your client base?
  8. Investing Basics

    Beware Of Company Stock In Qualified Plans

    While this strategy does have a few advantages, it can also pose some substantial risks to employees.
  9. Retirement

    Job Hunting: Higher Pay Vs. Better Benefits

    Focusing on salary may be a mistake. Find out which benefits have the highest long-run payoff.
  10. Personal Finance

    America's Compensation Gap Shows No Signs Of Slowing

    The gap between the rich and the poor and middle classes is rapidly increasing in America. Historically this is not a good sign, as a strong middle class has been the backbone of the U.S. economy ...

You May Also Like

Hot Definitions
  1. Redemption

    The return of an investor's principal in a fixed income security, such as a preferred stock or bond; or the sale of units ...
  2. Standard Error

    The standard deviation of the sampling distribution of a statistic. Standard error is a statistical term that measures the ...
  3. Capital Stock

    The common and preferred stock a company is authorized to issue, according to their corporate charter. Capital stock represents ...
  4. Unearned Revenue

    When an individual or company receives money for a service or product that has yet to be fulfilled. Unearned revenue can ...
  5. Trailing Twelve Months - TTM

    The timeframe of the past 12 months used for reporting financial figures. A company's trailing 12 months is a representation ...
Trading Center