If your employees are paid cash tips, their paycheck might not be large enough to withhold taxes on both the cash tips and their hourly wage. If that happens, Workful will calculate the taxes withheld based on IRS requirements. Click here to view the requirements.
If your employee's cash tips are high enough that their net check amount is $0, you can record the check for tax purposes. Workful will track the remaining taxes due and withhold them from the employee's next paycheck, if possible.
Run Payroll with Cash Tips
To run payroll for an employee with cash tips, click "PAYROLL" from the admin menu.
Click “RUN PAYROLL”.
Select the employee.
Enter their cash tips for the pay period.
To finish processing payroll, click “CONTINUE”.
After you have run payroll, you can view total wages paid, net wages paid, PTO hours used, and your tax liability. You will notice that your employee with a large amount of cash tips has a net gain of $0.
If you'd like to watch a video on how to run payroll, click here.