Tip Income Reporting
The most frequently asked tax questions related to Tip Income Reporting
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Answer Tax QuestionsEmployer Form 8027 - 8% Tip Reporting Guideline
Asked Thursday, March 01, 2012 by an anonymous user
The law requires your employees to report 100% of tip income and the 8% threshold is only one way that the IRS monitors compliance and flags under reporting restaurants.
The 8% percentage that is used on the Form 8027 is just a IRS guideline. Just because this is the “threshold” number that the form uses to require you to allocate additional tip income does not mean that this is all you need to report to be safe from an IRS audit.
The law requires your employees to report 100% of tip income
The 8% percentage that is used on the Form 8027 is just a IRS guideline. Just because this is the “threshold” number that the form uses to require you to allocate additional tip income does not mean that this is all you need to report to be safe from an IRS audit.
The law requires your employees to report 100% of tip income
Tip Reporting - Point of Sale Systems
Asked Thursday, March 01, 2012 by an anonymous user
A Point of Sale Register system that tracks server sales by employee is a valuable tool to assist you to see if the servers are accurately reporting their tips.
Your Point of Sale system should report each server’s total credit card sales and total charged tips on credit cards, and the server’s total sales (cash and credit card).
From the credit card information you can get a tip percentage to apply to the server’s cash sales.
Combine the total credit card tips and the estimated cash tips for the period in question and compare this total to the tips reported by the employee.
Your Point of Sale system should report each server’s total credit card sales and total charged tips on credit cards, and the server’s total sales (cash and credit card).
From the credit card information you can get a tip percentage to apply to the server’s cash sales.
Combine the total credit card tips and the estimated cash tips for the period in question and compare this total to the tips reported by the employee.
Waiter and Waitress - Tip Reporting
Asked Thursday, March 01, 2012 by an anonymous user
If your total tips for any 1 month from any one job are less than $20, do not report the tips for that month to that employer.
Report to your employer only cash, check, and debit and credit card tips you receive.
If you participate in a tip-splitting or tip-pooling arrangement, report only the tips you receive and retain. Do not report to your employer any portion of the tips you receive that you pass on to other employees. You must report tips you receive from other employees.
If your employer does not give you any other way to report your tips, you can use Form 4070, Employee's Report of Tips to Employer. Fill in the information asked for on the form, sign and date the form, and give it to your employer.
If you do not use Form 4070, give your employer a statement with Your name, address, and social security number.
Your employer's name, address, and business name (if it is different from your employer's name).
The month (or the dates of any shorter period) in which you received tips.
The total tips required to be reported for that period.
You must sign and date the statement. Be sure to keep a copy with your tax or other personal records.
Report to your employer only cash, check, and debit and credit card tips you receive.
If you participate in a tip-splitting or tip-pooling arrangement, report only the tips you receive and retain. Do not report to your employer any portion of the tips you receive that you pass on to other employees. You must report tips you receive from other employees.
If your employer does not give you any other way to report your tips, you can use Form 4070, Employee's Report of Tips to Employer. Fill in the information asked for on the form, sign and date the form, and give it to your employer.
If you do not use Form 4070, give your employer a statement with Your name, address, and social security number.
Your employer's name, address, and business name (if it is different from your employer's name).
The month (or the dates of any shorter period) in which you received tips.
The total tips required to be reported for that period.
You must sign and date the statement. Be sure to keep a copy with your tax or other personal records.