Question

Nicoula is a server at a La Jolla restaurant. Nicoula received $1,200 in unreported tips during 2016 and owes Social
Security and Medicare taxes on these tips. Her total income for the year, including the tips, is $4,300. Is Nicoula required
to le an income tax return for 2016? Why or why not?
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Answer 1

Answer:

Yes. Nicoula is required to pay tax including the tips

Explanation:

Since Nicoula received $1,200 in unreported tips during 2016 and owes Social  Security and Medicare taxes on these tips. Her total income for the year, including the tips, is $4,300.

Nicoula is required  to pay an income tax return for 2016 because Tips are considered to be part of employee wages and or salaries, hence employers are required by law to withhold and pay to the IRS payroll taxes on the tips employees report to them each month.

It is mandatory to report on the tax return, the amount of any Social Security and Medicare taxes Nicoula has failed to pay on her 'tip income'.