#2 Mistake: Failing to report tips
Are you working as a waiter? You must report tips! Inform your employer about the amount of money you received, so that he or she can withhold federal income and payroll taxes and, of course, report the correct amount to the Social Security Administration.
Failing to report tips will give you headaches and a penalty that consists of 50% of the payroll taxes you must pay on the unreported tips. You should keep track of both cash and credit card tips. Write down the amount of money you received from customers or other work buddies every single day.
It is crucial for your finances to report the correct amount of money every time. If not, the IRS will most definitely knock on your door and it won’t be with an envelope stuffed with cash!
