Pay a 1099 contractor with cash tips

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Pay a 1099 contractor with cash tips

Contractors are encouraged to accurately report all income, including cash tips, to comply with tax regulations. Reporting cash tips not only fulfills legal obligations but also helps build a solid financial history. This guide will walk you through the process of reporting cash tips via an off-cycle payroll using Homebase before the end of the year.

Why Report Cash Tips: Homebase Payroll makes it easy for contractors to stay compliant with tax regulations. Accurate reporting of cash tips ensures transparency and facilitates proper tax filings, preventing potential penalties and audits while supporting financial credibility.

How to Report Cash Tips with Homebase:

  1. Run an Off-Cycle Payroll: through your Homebase Payroll dashboard, initiate an off-cycle payroll specifically for reporting cash tips. Select the contractor(s) you want to report tips and "Other" as the Reason for Off-cycle Run.

  2. Add Cash Tips in Additional Earnings: when running the Payroll, click in Add+ to access the additional Earnings field. Enter the total amount of cash tips received by the contractor in this field.

  3. Select Payment Method as Paper Check: Opt for the payment method as a paper check within Homebase Payroll. This choice ensures that the off-cycle payroll is created solely for reporting purposes, with no actual funds transferred, as contractors have already received the tips in cash.

  4. Generate 1099 Form: Come tax season, Homebase Payroll will automatically incorporate the reported cash tips into the contractor's total earnings on the 1099 form. This streamlined process simplifies tax filing and ensures all income is accurately reflected.


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