Rules on tip reporting

August 22, 2017 Written by

Working in the service industry often means part of your income comes in the form of tips. Keeping records of your tips is a necessary part of reporting this income for tax purposes, but do you have a good system in place to do this?

Proper tip reporting has three components:

  1. Keeping a daily record.
  2. Reporting tips to your employer.
  3. Reporting your tips on your tax return.

Recording daily activity – Per the IRS you can either keep a daily log or save the documents that show your tips. You can also use form 4070A to document your tips.

Reporting tips – You should provide a monthly summary to your employer by the 10th of the following month.

Keeping track of tip income can be made manageable by a good reporting system. Please contact the office if we can help.

 

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Written by: Doug Rodrigues