How to Add Reported Tips as Earnings
Please note that this is currently only released to a fraction of our customers. If you'd like to utilize Reported Tips, please contact us and we'd be happy to assist in setting this up for you!
- Go to the Settings tab of the Payroll app.
- Click on Pay Types from the left hand menu.
- Enter the Earnings Name.
- Select Reported Tips for the Earnings Category.
- Click Create to save.
How to apply a Reported Tips earning to an employee's pay run:
We recommend paying out Reported Tips alongside an additional Earnings type. When Reported Tips are the only Earnings on a paystub, it can cause issues with generating taxes, reports, and any Reimbursements recorded on the paystub.
- Go to the relevant run and click on the employee's name.
- Click on +Add Earning under the Earnings section.
- Enter the total amount of tips.
- If the total regular earnings isn't enough to cover for the total due for taxes, the section for Uncollected Employee Taxes will show the amount of money we were unable to collect this run, and will roll it over to the next run.
Food and beverage establishments with more than 10 employees must allocate tips if the amount of tips reported by employees for a payroll period is less than 8% of the establishment’s
gross sales subject to tips for that period. The difference between the amount reported by the employees and 8% must be allocated to the employees and reported on the employees’ W-2 forms, although the amount allocated
is not subject to federal income tax withholding or social security, Medicare, or FUTA taxes.
Reported Tips & Taxes
When calculating taxes that include Reported Tips earnings, Zenefits will be collecting the mandatory taxes for Medicare and Social Security first. Income tax and other taxes will not be displayed in the uncollected tax section at this time. Reported tips do not get added to net pay, and will only be used for tax calculations for cash tips.
In the example paystub below, the blue arrow displays if there are any uncollected taxes in the current pay run. If an employee has uncollected taxes, the paystub will display a positive number under the Estimated Uncollected Taxes. In the scenario that the employee was able to contribute some uncollected taxes from the previous pay run, you’ll be able to see a negative amount displayed under the Estimated Uncollected Taxes section.
The green arrow displays if there are any remaining uncollected taxes for the year. If there is a positive number displayed, then the employee is still responsible for remitting this amount throughout the year. If there is $0, then the employee is caught up with their uncollected taxes.
Where can I find a report on tips or their uncollected taxes?
The new Reported Tips report will show a snapshot of employees who have reported tips or who has uncollected taxes. To download the report, follow these steps:
- Go to the Payroll app on your administrator dashboard.
- Select the Reports tab.
- Scroll all the way down until you see the Reported Tips report and click on Create.