Structuring a 401(k) to include employees receiving tips

Article Abstract:

The popularity of 401(k) plans has increased, but participation in 401(k) plans poses unique problems for employers of employees who receive substantial tip income. Tip income typically is either distributed or declared: distributed tips are under the employer's control, while declared tips are received directly by the employee and declared to the employer through a written statement. To allow employees receiving substantial tip income to participate in a 401(k) plan, the employer must retain control over the employees' wages and tips. When structuring a 401(k) plan for employees receiving substantial tip income, the employer must carefully plan for withholding arrangements and be cognizant of whether there are any liens on the employee's income for tax or child support.

Accounting and auditing, Wages, Wages and salaries, Salary reduction savings plans, 401K plans, Tipping

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Home office deduction rules eased - next year

Article Abstract:

Business expenses that were incurred in home offices will be considered tax deductible effective 1999 with the implementation of the Taxpayer Relief Act of 1997. This law supersedes the decision of the Supreme Court in the 'Soliman' case by widening the conditions that allow taxpayers to meet the criteria for 'principal place of business.' Section 280A(c)(1)(A) provides that home office-related expenditures are considered deductible if a particular area of the house is used 'regularly' and 'exclusively' as a principal place of business. The 'principal place of business' definition may also refer to a place to meet with customers, a separate structure, a storage area or a day care facility.

Tax Law, Public Finance Activities, Analysis, Tax deductions, Home offices

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