9/05/2005

Advice from Nashville's leading Financial Aid Advisor Dave Ramsey

 
Dave Says
By Dave Ramsey
Author of:
Financial Peace and
The Total Money Makeover

"Reporting tips and untraceable income?"

Dear Dave,

My husband’s income is more than 50% tips, and his employer only reports enough tips on his paycheck to bring his hourly wage up to minimum wage. Since this is what’s reported to the IRS, they would not be able to prove what he actually earned during an audit. Do you feel we are morally obligated to report all the income, including the additional cash tips?

Renee via email

Dear Renee,

It’s very simple. We’re supposed to pay taxes on our income. I pay taxes on every dime of income I create. Whether the IRS can prove the actual amount you made is irrelevant. You’re lying to the government if you don’t pay taxes on your full income. 

You do not want to lie, Renee. Your integrity is worth more than a few tax dollars. I hate taxes as much as anyone, and I’ll never pay a dime more than I’m required to pay. But, yes, you’re supposed to pay taxes on everything you owe. Just do it.

- Dave

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