Tips: Credit card vs Cash, Federal vs State Tipped Min Wage
Video and Transcript: UNDER CONSTRUCTION
Credit Card Vs. Cash Tips
Cash tips are usually entered under the Tips earning, it is taxed and included in their gross but is not paid. Credit Card Tips have two types of earnings: Tips Credit Card and Tips Credit Card Paid. Most restaurants and tipped businesses choose to pay out their credit card tips the night of and use the Tips Credit Card to record on the employee’s gross and be taxed. They can elect to include credit card tips in their paid earnings by using Tips Credit Card Paid. It works the same as the Tips Credit Card, but the employee is paid their with their other earnings.
Federal Vs. State Tipped Minimum Wage
The Federal Tipped Minimum Wage is $2.13 per hour. This means all tipped employees’ wages and tips combined must equal $7.25 per hour or more. Some states do have a higher Tipped Minimum Wage and minimum wage, which must be used to be in compliance with the state. Washington State, Colorado and Oregon are examples. Each state Department of Labor website should have their minimum wage rate listed. The MakeUp Tips earning can be used to add tips to their gross wages to bring them up to minimum wage but are not paid. The Restaurant Setup Help article in University is very helpful and gives a guide to the different tip earnings.