The IRS doesn’t treat mandatory gratuity as a tip.
While tipping is not mandatory in most of the U.S., it is often expected in many circumstances when services are provided. The tip income from services—whether cash or included in a charge—is taxable income. As taxable income, these tips are subject to federal income, social security and Medicare taxes, and may be subject to state income tax as well.
Receiving a notice from the IRS might cause instant panic, but there is typically no reason to alarm yourself. Take a deep breath and realize that unless you are living life as a mobster or other criminal, you're most likely safe.
Following are a few reasons why the IRS might send you a notice:
With so many activities to do this summer, it can be hard to decide what to do with your sun-filled days.
From planning weekend getaways and enjoying the outdoors to giving back to the community, the possibilities are endless.
Some disability retirement benefits qualify as earned income to claim the Earned Income Tax Credit or EITC. Also, you may claim a relative of any age as a qualifying child if the relative is totally and permanently disabled and fits all other EITC requirements.