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Reporting Tip Income - Restaurant Tax Tips

Reporting Tip Income - Restaurant Tax Tips

Internal Revenue Service

August 18, 2009

Tips your employees receive from customers are generally subject to withholding. Employees are required to claim all tip income received. This includes tips you paid over to the employee for charge customers and tips the employee received directly from customers.

Employee Requirements

Employees must report tip income on Form 4070, Employee’s Report of Tips to Employer, (PDF) or on a similar statement. This report is due on the 10th day of the month after the month the tips are received. This statement must be signed by the employee and must show the following:

-The employee’s name, address, and SSN.
-Your name and address.
-The month or period the report covers.
-The total tips received.

No report is required from an employee for months when tips are less than $20.

Both Forms 4070 and 4070-A, Employee’s Daily Record of Tips, (PDF) are included in Publication 1244, Employee’s Daily Record of Tips and Report to Employer. (PDF)

Employer Requirements

Employers must collect income tax, employee social security tax and employee Medicare tax on tips reported by employees. You can collect these taxes from an employee’s wages or from other funds he or she makes available.


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