Ceridian offers support for tipped employees. You must use deduction description TIPSx to record cash or charge tips in the Ceridian Payroll System (Signature) and subsequently on W-2 statements for each applicable employee. If you have employees in several states where tips are taxed differently, more than one TIPSx deduction description is necessary.

Each TIPSx deduction description must be set up in the Deduction table in the Ceridian Payroll System (Signature) and on your Ceridian payroll product.

Normally, you would use an S1 code of 0 and an S3 code of T for TIPSx deductions because the amount typically varies from pay period to pay period.

The S2 code entered for an employee's TIPSx deduction determines taxability for that employee's tips. You can use an S2 code of 5, 6, 7, or 8 for TIPSx deductions. For additional information, see related topic Standard Table of S2 Codes. If you are unsure of which S2 code to use, contact your company's tax attorney or advisor for guidance.

If you begin to use Ceridian's payroll service after the start of the year, at mid year for example, you should enter the year-to-date tips amounts for each employee for W-2 statement reporting purposes. To input year-to-date amounts for tips, enter the description (for example, TIPS), the amount, the normal S1 and S2 code, and an S3 code of Y. Never use an S3 code of N to input year to date tips - N doesn't update the taxable wage categories and, thus, requires subsequent adjustments to correct W-2 statements.

If you are converting from another vendor to Ceridian's payroll service, it is possible that year-to-date gross is already adjusted for tips. You can use this method to determine whether your previous vendor's gross includes tips:

Take the gross amount and multiply it times .0620 (that is, 6.20 percent). If the result is the same as the Social Security tax, you need to decrease your previous vendor's gross.

This example illustrates the entries required to enter tips when tips are included in a vendor's gross wages:

Deduction	Amount	Status Code
YGROS	10000.00-
TIPS	10000.00	XXY

Replace XX in Status Code with the S1 and S2 code that you normally use for tips. Notice that the YGROS amount is negative and the TIPS amount is positive.