How to report tips.
Report your tips with your wages on line 1, Form 1040EZ, or line 7,
Form 1040A or Form 1040.
What tips to report.
You must report all tips you received in 2000, including both cash
tips and noncash tips, on your tax return. Any tips you reported to
your employer for 2000 are included in the wages shown in box 1 of
your Form W-2. Add to the amount in box 1 only the tips you did
not report to your employer.
If you received $20 or more in cash and charge tips in a month and
did not report all of those tips to your employer, see Reporting
social security and Medicare taxes on tips not reported to your
If you did not keep a daily tip record as required and an amount is
shown in box 8 of your Form W-2, see Allocated Tips,
If you kept a daily tip record and reported tips to your employer
as required under the rules explained earlier, add the following tips
to the amount in box 1 of your Form W-2:
- Cash and charge tips you received that totaled less than $20
for any month, and
- The value of noncash tips, such as tickets, passes, or other
items of value.
John Allen began working at the Diamond Restaurant (his only
employer in 2000) on June 30 and received $10,000 in wages during the
year. John kept a daily tip record showing that his tips for June were
$18 and his tips for the rest of the year totaled $7,000. He was not
required to report his June tips to his employer, but he reported all
of the rest of his tips to his employer as required. The sample
filled-in forms show his daily tip record (Form 4070A) and his report
to his employer (Form 4070) for October.
John's Form W-2 from Diamond Restaurant shows $17,000
($10,000 wages + $7,000 reported tips) in box 1. He adds the $18
unreported tips to that amount and reports $17,018 as wages on line 1
of his Form 1040EZ.
Reporting social security and Medicare taxes on tips not
reported to your employer.
If you received $20 or more in cash and charge tips in a month from
any one job and did not report all of those tips to your employer, you
must report the social security and Medicare taxes on the unreported
tips as additional tax on your return. To report these taxes, you must
file a return even if you would not otherwise have to file. You must
use Form 1040. (You cannot file Form 1040EZ or Form 1040A.)
Use Form 4137, Social Security and Medicare Tax on
Unreported Tip Income, to figure these taxes. Enter the tax on
line 53, Form 1040, and attach the Form 4137 to your return.
Reporting uncollected social security and Medicare taxes on
If your employer could not collect all the social security and
Medicare taxes or railroad retirement tax you owe on tips reported for
2000, the uncollected taxes will be shown in box 13 of your Form
W-2 (codes A and B). You must report these amounts as additional
tax on your return. You may have uncollected taxes if your regular pay
was not enough for your employer to withhold all the taxes you owe and
you did not give your employer enough money to pay the rest of the
To report these uncollected taxes, you must file a return even if
you would not otherwise have to file. You must use Form 1040. (You
cannot file Form 1040EZ or Form 1040A.) Include the taxes in your
total tax amount on line 57, and write "UT" and the total of the
uncollected taxes on the dotted line next to line 57.
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