Filipino workers call Nevada taxes on tips outrageous

By Bev Llorente, ABS-CBN North America Bureau

Feb. 17, 2014

LAS VEGAS – In a hospitality driven economy like Nevada, many low-waged workers rely solely on tips for income.

On top of that, workers say, they feel they are being overtaxed.

Philip Ducut works as a machine slot attendant in one of the casinos in Las Vegas. He says that it’s outrageous to pay taxes on tips earned.

The IRS makes an estimate of how much service sector workers make in tips and taxes them even if the taxpayer did not earn such an estimate.

“Iba iba yung bracketing naming,” Ducut said. “We are declaring so much. Like this is the amount we are declaring every two weeks versus, for example table games, casino, like they have to declare it everyday because their tip has to be cut everyday.”

But IRS experts say that it has some advantages, too.

“Make sure that you declare those tips if you are a waitress or your job really gives you tips,” CPA and IRS attorney Nadia Jurani said. “There is a good advantage here because those tips that you declare that will increase your social security wages.”

Meanwhile, there’s a new Nevada law on entertainment tax.

The law requires owners of an entertainment business with 7,500 seats or more to pay an additional five percent of their admissions to the state. Venues with 7,499 seats or less must pay 10 percent.

The tax is in addition to regular state and local sales taxes which average about 7.9 percent in Nevada, and generates about $130 million per year for the state.

Now that tax season is here, the tax filing business is also booming.

Enrolled agents like Anita Sta. Ana say to be careful when looking for a company to have your taxes prepared.

“One thing you have to remember when you are going to pay for taxes, look for those tax professionals or preparers that will not base their fee on the percentage of the refund,” Sta. Ana warned. “They must have a standard fee for every form 1040 businesses, 1120s. Don’t look for percentage on refund.”