Essentials of Federal Income Taxation 3. Tips. (Obj. 1) The following questions involve tip income an X in the proper column. question by inserting True False a. Employees receiving less than $20 in monthly tips while work ing for one employer need not report them to the employer. b. Employees receiving less than $20 in monthly tips do not pay social security and Medicare taxes on their tips. c. Employees receiving less than $20 in monthly tips do not pay income taxes on their tips. d. The IRS normally assumes that food and beverage servers make at least 10% of gross sales in tips. e. When tips reported to employers are less than the IRS's assumed tipping rate, some employers must report the difference as additional income on the employee's Form W-2. f. "Allocated tips" are subject to withholding for income, social security, and Medicare taxes