Your paycheck isn't itemized by shift. It's one lump sum for the whole pay period. Good luck figuring out which Saturday paid for what. If you're not tracking your tips, you have no way to know if it's right.
The fix is to keep your own record of every shift and know what's supposed to be in the check.
What's supposed to be in your paycheck?
- Your hourly pay. If your state allows it, your employer can pay as little as $2.13 an hour and count your tips toward the rest of the $7.25 federal minimum wage. When your employer counts your tips as part of your wage, that's called a tip credit. If your tips and pay come up short in a workweek, your employer has to make up the difference (Labor Department Fact Sheet #15). Alaska, California, Minnesota, Montana, Nevada, Oregon and Washington make employers pay the full state minimum wage before tips, and many other states set their own rates (state table).
- Your card tips. They have to be paid by your regular payday. The Labor Department says your employer can take out the card company's fee on them, but no more than the actual fee (Fact Sheet #15).
- Cash tips, if your job runs them through payroll. If you take your cash home at the end of the night, it isn't on the check. But if you report it, the taxes on it are.
- Service charges. An automatic 18% on a big party isn't a tip. It counts as wages and gets taxed like your regular pay (IRS).
If you're in a tip pool, your check has your share of the pool, not every tip you were handed. Managers and supervisors can't keep any part of your tips (29 CFR 531.52). If your employer pays you less than minimum wage and counts your tips toward it, a required tip pool can only include staff who usually get tips. If they pay the full minimum wage without counting your tips, the pool can include cooks and dishwashers too (29 CFR 531.54).
How do you check your paycheck?
Keep your own record for every shift: the date, your hours, your hourly rate, card tips, cash tips and what you tipped out. The IRS expects a daily tip record anyway (IRS Publication 531).
On payday, add up the shifts in that pay period: your hours times your rate, plus your card tips, plus cash tips if your job pays them on the check. Compare that to your pay stub before taxes. Stubs vary. Some also list the cash tips you reported, because they're taxed, even though that cash is already in your pocket. If the numbers don't match, ask. Payroll makes mistakes. Your notes are how you catch them.
Balance is built for the logging part. You log hours, wages, card tips and cash tips with every shift, so you have your own record to check each paycheck against (how Balance handles cash tips). Balance doesn't calculate taxes.
Why is my paycheck so small?
Because the taxes on all your reported tips come out of your hourly pay. Your employer withholds income tax, Social Security and Medicare on your tips from your regular wages, or from money you give them to cover it (IRS Publication 15). Yes, cash you took home and reported on Saturday can shrink the check you get two weeks later.
When your hourly pay isn't enough to cover it all, your employer takes the taxes on your hourly pay first, then Social Security and Medicare on your tips, then income tax on your tips (IRS Publication 15). Social Security and Medicare that couldn't be collected show up in box 12 of your W-2, under codes A and B, and you pay them when you file (IRS Publication 531). Codes A and B are the IRS's way of saying you still owe it. Any income tax that couldn't be withheld, you owe when you file too.
The new federal tip deduction can lower the income tax part. You can give your employer an updated W-4, the form that tells them how much tax to take out, so less gets withheld (IRS Publication 15). Social Security and Medicare still come out. More on that in Does no tax on tips cover your cash tips?
How often do you get paid?
Your state sets the rules, so check your state's labor department. The Labor Department keeps a state-by-state payday table, though it was last updated in 2023.
None of this is tax or legal advice.