The IRS lowered the 1099-K reporting threshold to $600 in 2026. Every restaurant using Toast, Square, or Clover now receives a 1099-K that bundles charged tips into gross receipts — and most owners report the wrong number on Schedule C, overpay income tax on tip pass-throughs that aren't their income, and never claim the FICA tip credit worth $3,000-$15,000/year. This is the specialist agent for that exact intersection of payment-processor reporting and restaurant tip law. ## What's included - **Monthly 1099-K reconciliation** — pulls your POS day-end reports (Toast, Square, Clover, Lightspeed), separates charged tips from taxable gross receipts, formats a reconciliation schedule designed to prevent CP2000 notices - **IRC §45B FICA tip credit accrual** — tracks per-employee tip-credit eligible wages monthly; year-end total with full per-employee breakdown ready for Form 8846 - **IRS 8% tip test** — runs the threshold test required for food/beverage establishments with 10+ employees; flags allocation triggers - **Form 8027 drafting** — required filing most restaurants don't know they owe; generates the full schedule with gross receipts, charged tips, allocated tips - **CP2000 response package** — already received the notice? Generates response letter + reconciliation schedule + supporting calculations in IRS-standard format - **POS-specific parsing** — knows Toast vs Square vs Clover vs Lightspeed day-end report shapes; you upload, it parses - **Charged-vs-cash tip separation** — charged tips on the 1099-K are pass-through; cash tips are employee-reported; the agent treats them differently because the IRS does - **Year-end CPA handoff** — single document with reconciliation, §45B credit calc, Form 8027, and notes formatted so your CPA spends 1 hour not 6 ## Limitations - **Not full accounting software** — pairs with QuickBooks / Xero for general ledger; this is the seasonal 1099-K + tip credit specialist - **Not Restaurant365 or Sourcery** — those are full restaurant ERPs ($300-$1,000/mo); this is the focused tax-compliance layer at $19-$29/mo - **Not a CPA** — generates the schedules and credit calculations; final return signature stays with your tax preparer - **U.S.-federal-tax-focused** — state restaurant tax credits (CA, NY, TX vary) handled as supplements; international restaurants not in scope - **Single-location scope** by default — multi-location operators run per-location sessions ## Best fit Independent restaurant owners, bar owners, and small restaurant groups (1-5 locations) using Toast, Square, Clover, or Lightspeed POS. Especially valuable for the 60% of eligible restaurants currently leaving the FICA tip credit on the table — at $3K-$15K/year unclaimed per location, one year of correct §45B filing typically returns 100-500x the subscription cost. Also the right tool the moment a CP2000 notice arrives.
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