Tips and taxes
First, I’m not an accountant. I’m just trying to stay organized. This blog entry isn’t so much advice as it is an explanation of one way to handle your money. You’ll need to talk to a tax professional.
So, with that said, here is what you need to consider: If you do not files taxes long enough you will get audited, and then you’ll owe all sorts of money and be in trouble. Better to just bite the bullet and act like a law-abiding citizen of this country. With cash tips you’re on the honor system, but just remember all the various paper trails you leave behind you (credit card purchases and payments, bank statements with deposits listed, etc.).
Trying to keep up with all this crap confounds me. I keep my receipts only to find out I’m not claiming enough to itemize. I’ve set aside enough this time, but not that time for whatever confusing reason. If you’re not on the payroll and getting a check at the club(s) where you work, then you may also be self-employed, and therefore responsible for your taxes AND your social security. Blah, blah, blah! UGH!
So, this is my idea to keep it simpler for 2009:
I plan to open an account that will be used as the initial dump site for my tips. I will have a statement each month with the total deposits listed. That can be totaled up at the end of 2009 (or at the end of each quarter therein) to keep it much simpler. I’ll transfer out of that account into my regular checking/savings account, but leave behind what I hope is enough to pay taxes. With any luck I’ll have set aside more than necessary and have a “return” at the end of the year.
For 2008 all this is confusing, because the total deposits on my statements include transfers, and I don’t want to say I’ve made the same money twice! I’m still going to keep receipts in case I do claim enough to itemize, and then it’s just simple arithmetic (yeah, right).
Anyway, I suggest finding a way to track your earnings, set aside taxes, and file each year.