What is typically the rate for tips to be considered as taxable income by the IRS?

Tips are generally considered taxable income by the IRS when they exceed a specific threshold. This threshold is set at $20 in a calendar month. Therefore, any tips received that total more than $20 must be reported as income on tax returns. This guideline applies to tips received in cash, as well as those added to credit card charges.

The other options do not represent the IRS's standard for taxable tips. For instance, a fixed amount like $1.00 or $2.13 does not pertain to the IRS's reporting requirement, and a fixed percentage based on sales lacks relevance in defining taxable tips. Only the $20 threshold aligns with IRS regulations, emphasizing the importance of understanding how tip income is reported for tax purposes.