8889 Instructions Form

8889 Instructions Form: What You Should Know

Who Qualifies as a Tip Worker An employee who receives more than 31.50 per month in tips as tips and who actually receives more than 31.50 in tips per month would be a tipped employee‱‥. Other employees of the employer would be classified under the provisions of federal law and by the rules of various state and local jurisdictions as tipped employees or non-employee tipped employees‱‥. The only requirement under federal law that limits the number of tipped employee individuals or the amount of tips taken from tipped employees is the 2,080 minimum tips per month from each tipped employee. Federal Tipped Employees In a large food or beverage establishment, if no more than 50 employees receive tips in a reporting period (defined in §§ 20.31(b) and (c)) then only 50 percent of the tip income from each tipped employee qualifies for the federal minimum tip credit. Employees who exceed the annual tip limit of 31.50 on a monthly basis are considered non-employees and the remaining 50 percent of the tips may be taken from the other employees. State Tipped Employees In addition to the federal tipped employee classification, all individuals in a state are considered non-employers for the purposes of the Federal Minimum Tip Credit and the State Minimum Tip Credit. This means that in a state where the minimum wage is greater than the federal minimum wage, employers may pay tipped employees only the less of: (1) the least of: (i) the federal minimum wage or the state minimum wage which is less than 20 percent lower than the federal minimum wage; and (ii) the employee's federal tips credit (other than the “regular” tips credit); or (2) 50 percent of the regular tips under applicable law. Employers in a state with a minimum wage less than the federal minimum wage may require tips from tipped employees in accordance with State law. For example, in California, employers may require tips from tipped employees equal to at least 10 percent of the regular tips received. In addition, employers in a state with a minimum wage greater than the federal minimum wage may require tips from tipped employees equal to at least 1.

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