Do Waitress Tips Show on a Paycheck in Maryland?

Waitresses have to report their tips.

Waitresses have to report their tips.

Waitressing is tough work. Balancing dishes with the wishes of customers takes place largely in the pursuit of big tips. According to a 2010 report from the Bureau of Labor Statistics, waitresses make a median hourly wage of $8.81. That includes tips. Waitresses who work in Maryland will find that their tips are subject to state and federal withholding. All federal withholding shows up on paychecks.

Cashing In

Many patrons pay tips in cash, and although that money may seem like a bonus, tax officials consider it income. According to the Maryland Department of Labor, Licensing and Regulation, employers may pay tipped employees no less than $3.63 per hour, provided they earn enough in tips to bring their average hourly wage to at least the state minimum wage of $7.25 per hour. Regardless of whether you receive the money in cash, reporting tips is the law.

Record and Report

Resist the temptation to tuck a few bucks in your pocket to avoid paying taxes. That's illegal. Besides, it could come back to haunt you. Let's say you earn $45,000 a year -- plenty to qualify for a car loan -- but you only report $25,000 on your income tax return. To explain the discrepancy when applying for a loan, you must admit to cheating on your taxes. Many employers provide tip-tracking worksheets. But ultimately, you bear responsibility for tracking and reporting tips.

Facing the Fed

According to the IRS, if you earn less than $20 a year in tips, you don't have to report them. Otherwise, employees must give their employers written reports of tips by the 10th of the following month. You also must include tips as income on your tax return. Any tip-sharing arrangement, and charged tips, such as credit and debit card charges distributed to the employee directly from the employer, also count as income and will show up on your paycheck.

The State's Stake

In Maryland, tipped employees are those who regularly earn more than $30 per month in tips. Restaurants are exempt from paying minimum wage only if tips can cover the deficiency in minimum pay. The employer must make up the deficiencies to bring a waitress's pay to the minimum wage level. Waitresses who perform non-tip duties, such as acting as hostess for the day, must receive from their employer at least the full minimum wage rate for that nontipped period.

 

About the Author

ML Corbett covers interior design, real estate and small business, among other topics. A former day spa owner and marketing manager for an international fragrance company, Corbett knows the ins and outs of the beauty industry. Her work has appeared in "Essence," "Black Enterprise" and on HGTVGardens.com.

Photo Credits

  • Photodisc/Photodisc/Getty Images