Internal Revenue Service United States Department of the Treasury
Level Basic Advanced Military International

Other Taxes Workout

Tip Income

Skills Warm Up: Tip Income

Question 3 of 3

Remember Nancy who had a summer job at a coffee hut? She made $18 in tips in May, $755 in June, $600 in July, and $45 in August; she only reported $1,000 in tips to her boss.

On what amount of unreported tips does Nancy have to pay Social Security and Medicare taxes when she files her tax return?

$1,418
$400
$45
$18