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THTreasurer
November 29, 2021
Question

Reporting Cash Tips in and out on employee paychecks in online payroll

  • November 29, 2021
  • 2 replies
  • 0 views

My employee earn cash tips and take those tips home with them each night. They report those tips to me manually, to be properly included in their wages.  I see in QB online payroll where I can report the cash tips earned as an other form of compensation. However, since they took the cash with them the night they were earned, how do I show the tips at retained on their paycheck (i.e, there should be a cooresponding "tips out" that matches the "tips in". I know how to do this via "lists" in desktop payroll, but now that I am switching on online payroll, I don't know how to set up the other half of this transactions.Thanks.

2 replies

Kristine Mae
Kristine Mae
November 29, 2021

Let me share how you set it up in QuickBooks Online, THTreasurer.

 

Cash tips are gratuities that are given or paid to the employees in the form of cash, rather than added in their paychecks. You use the Cash tips account to track them. When you create paychecks, you'll have to enter the reported cash amount so that taxes will be withheld. Having said this, there's no need to set up a Tips out account.

 

I'll walk you through setting it up:

  1. Click Payroll.
  2. Go to the Employees tab.
  3. Select the employee to open their profile.
  4. Click the Pencil icon beside Pay.
  5. Under How much do you pay Employee?, click the Pencil icon.
  6. Go to Common pay types, then check the Cash Tips box.
  7. Click Save.

I'll share these references to guide you better:

Feel free to get back to this thread if you have additional payroll questions. We'll reply as soon as we can. Take care!

E
EvergreenK
February 14, 2023

Hello,

I ran my payroll this evening and claimed the cash tips for my servers. However, when I checked the paystubs the math does not add up. The cash tips are not included in the gross wages and taxed. Is there a way I can set this up correctly?

L
LeizylM
February 14, 2023

Hi there, EvergreenK. 

 

I'll make sure you'll be able to show the cash tips in QuickBooks Online (QBO) Payroll. 

 

If your employees received tips from customers, you’re required to track and withhold taxes from those tips. If the tip is less than $20 per month, tips aren’t subject to federal taxes.  You may visit the IRS website to learn more.

 

Here's how to set up payroll items for tips in QBO:

 

  1. Go to Payroll, then Employees.
  2. Choose an employee. 
  3. Select Edit under Personal Information.
  4. Choose Cash Tips or Paycheck Tips under Additional pay types.
  5. Once done, click Save.

 

Additionally, to help determine what type of tips you've provided to your employee, check out this article: 

 

 

Please let me know if you should have any questions about employee tips or QuickBooks-related topics. I'm always here to help and have a good one.

N
noteworthygirl
July 20, 2024

I'm having the exact same problem.  In desktop I had a payroll item deduction called tips out.  Apparently that's not possible in QBO and I have to go into employee set up and add that weeks tip deduction amount to every tipped employee before I can run payroll.  We also pay commission to some people that is based on a percentage of sales, so that will have to be edited every week as well. It's very disappointing that QBO doesn't seem to be able to handle this issue as well and QB desktop, and adds a lot more work for me since we pay 55 employees. 

G
GenmarieM
July 20, 2024

I understand the struggle on your end, and I'm here to share detailed information about tip deduction. Managing finances and ensuring accurate records is crucial for any business. The ability to deduct tips directly within QuickBooks Online would be incredibly beneficial for streamlining your payroll and accounting processes. It would save time and reduce the potential for errors, making your financial management more efficient.

 

However, this feature is currently unavailable in QuickBooks Online (QBO). In the meantime, I recommend sending feedback to our Product Engineers. Your input is invaluable as it helps us understand the needs and preferences of our users. By submitting feedback, you can contribute to the development of future updates. Our Product Engineers regularly review user suggestions to identify areas for improvement and new features that could enhance the overall user experience.

 

Here's how:

 

  1. Select the Gear icon, then choose Feedback.
  2. Type in your product suggestions.
  3. Select Next to submit.

 

Your ideas and input are appreciated. We value your initiative in bringing these concerns to us. If you have cash tips, deductions, or any payroll-related queries, let us know by clicking the Reply button below. Our dedicated team is readily available to provide assistance and support whenever needed. We are committed to ensuring a smooth and seamless payroll experience for all.

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