Year-End Tax Tips and Reporting Checklist - Tips vs. Service Charges

Businesses with tipped employees need to be aware of the IRS’ intent to enforce the taxability of tips and service charges. A tip is subject to special withholding rules, while a service charge is treated as any other taxable wage. Service charges should be characterized as wages and not included with tips when calculating the FICA tip credit.

Minimum Wage Changes for 2013

The following states have enacted minimum wage changes for 2013. Please review your affected employees as you may need to increase some pay rates:

Arizona - $7.65 to $7.80 an hour. Minimum wage for tipped employees increases from $4.65 to $4.80 an hour.

Colorado - $7.64 to $7.78 an hour. Minimum wage for tipped employees increases from $4.62 to $4.76 an hour.

Florida - $7.67 to $7.79 an hour. Minimum wage for tipped employees increases from $4.65 to $4.77 an hour.

Missouri - $7.25 to $7.35 an hour. Minimum wage for tipped employees increases from $3.63 to $3.68 an hour.

Montana - $7.65 to $7.80 an hour. (Montana law does not allow employers to take a tip credit against minimum wage for tipped employees.)

Ohio - $7.70 to $7.85 an hour. Minimum wage for tipped employees increases from $3.85 to $3.93 an hour.

Oregon - $8.80 to $8.95 an hour. (Oregon law does not allow employers to take a tip credit against minimum wage for tipped employees.)

Rhode Island - $7.40 to $7.75 an hour. Minimum wage for tipped employees remains $2.89 an hour.

Vermont - $8.46 to $8.60 an hour. Minimum wage for tipped employees increases from $4.10 to $4.17 an hour.

Washington - $9.04 to $9.19 an hour. No tipped employee minimum.

Please contact us if you have any questions..