Dirty money clean Break

Definition: Tips are voluntary payments made by customers to service employees for services rendered.
Tax Status: In many jurisdictions, tips are considered income and are subject to federal income tax. However, they are not subject to payroll taxes if they are not reported to the employer.
Reporting: Employees are generally required to report tips to their employer if they exceed a certain amount (e.g., $20 per month in the U.S.).
Overtime Pay
Definition: Overtime pay is compensation for hours worked beyond the standard 40 hours per week.
Tax Status: Overtime pay is subject to the same federal and state income taxes as regular wages. There is no exemption for overtime pay from taxes.
Calculation: Overtime is typically paid at a rate of 1.5 times the employee's regular hourly wage.
Summary
Tips: Generally taxable; must be reported if they exceed a specific threshold.
Overtime: Fully taxable; calculated at a higher rate but subject to the same tax rules as regular wages.