Tips

[S T]

Partnership operates Charter Bus Tour. One of the partners receives tips when he drives the Bus. On his personal tax return, how to report his tip income, 4137 or Schedule C?

Thanks,

Sandy

[DaveO]

I bet the IRS would accept the tax either way it was reported. I would lean towards the schedule C since the 4137 is for tips not reported to your employer. As a partner he doesn't have an employer.

Could you report it as a second entry on the Schedule E page 2 as additional guaranteed payments? Like you report un-reimbursed partnership expenses?

[Gretel]

Sandy, I also would report it as business income and using Sch.E pg.2 sounds like a good idea.

I assume the tips are personal income from one partner and are not deemed to be partnership income (partnership agreement?)

[S T]

Tips Received

Yes, the tips are income for only one of the partners when he drives the bus, not partnership income.

Trying to determine whether to subject it to 7.65% or 15.3% fica/mcare and how to report. If I enter of page 2 of Sched E, does not appear that it will flow through to SE form.

Sandy

[Armando Beaujolais]

Schedule C. It's income from the taxpayer's profession.

If you use Form 4137, the IRS is going to go after the "employer" for the other half of FICA.

[S T]

Thanks

Thanks

Sandy