Tips are part of wages earned

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I am often asked if tips paid directly to servers by patrons of restaurants and bars are wages or some other form of payment?  The IRS is quite literal that tips paid to patrons are part of their compensation and the employer is responsible for payroll taxes similar to wages paid.  See the IRS excerpt below:

Section 3121(a) of the Code defines “wages” for FICA tax purposes as all remuneration for employment, with certain exceptions.  Section 3121(a)(12)(A) excludes from the definition of wages tips paid in any medium other than cash; section 3121(a)(12)(B) excludes cash tips received by an employee in any calendar month in the course of the employee's employment by an employer unless the amount of the cash tips is $20 or more. 

Employer FICA Obligations.  Under section 3121(q) of the Code, tips received by an employee in the course of the employee's employment are considered remuneration for that employment and are deemed to have been paid by the employer for purposes of the employer share of FICA taxes imposed by sections 3111(a) and (b), that is, social security tax and Medicare tax, respectively.  The remuneration is deemed to be paid when a written statement including the tips is furnished to the employer by the employee pursuant to section 6053(a), discussed below.