How to Declare Tips on Taxes
The Internal Revenue Service requires tipped employees to report all tips received in a calendar month to the employer by the 10th day of the month after the employee received the tips. The IRS does not require reporting in any month where the employee received less than $20 in total tipped compensation. To properly declare taxes to the employer, the employee must complete the IRS Form 4070 monthly and provide this form to the employer. The employer will then withhold the proper amount of taxes from the employee's paycheck based on the allowances claimed on the employee's Form W-4.
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Instructions
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1
Download and print the IRS Form 4070A. Many employers can also provide tipped employees with a copy of this form. This form is a daily record of tips received and you should use this form to record all tips received.
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2
Enter your name and address, your employer's name, the business name and the month and year in the appropriate boxes at the top of the form.
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3
Enter the date for the entry.
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4
Enter the amount of cash tips received directly from customers or other employees in box A.
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5
Enter the amount of credit and debit card tips received in box B.
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6
Enter the tips paid out to other employees in box C.
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7
Enter the names of the employees you paid out tips to in box D.
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8
Repeat these entries every day of the month that you received tips. At the end of the month, add the totals entered in boxes A, B and C in the "Totals" column located at the bottom of the form.
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9
Download and print the IRS Form 1070. Many employers also will provide this form to tipped employees.
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10
Enter your name, Social Security number, employer's name and address and the period you received tips.
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11
Enter the cash tips received from the Total box a field found on Form 4070A in box 1 of the Form 4070.
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12
Enter the credit and debit tips received from the Total box B field found on Form 4070A in box 2 of the Form 4070.
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13
Enter the tips paid out from the Total box C field found on Form 4070A in box 3 of the Form 4070.
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14
Add box 1 and 2 and subtract box 3. Enter this total in box 4.
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15
Sign and date the Form 4070 and give this form to your employer prior to the 10th of the month following the month you received the tips.
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