TipLedger / Guides
Guide · Updated October 21, 2026
How to track your tips for taxes
What the IRS expects you to keep, what you have to report and by when. Based on IRS Publication 531 (December 2024).
General information, not tax advice. TipLedger isn't affiliated with the IRS. For your own return, check with a tax professional.
Tips are income, all of them
Publication 531 counts all of these as tip income:
- Cash and check tips you get directly from customers.
- Debit and credit card tips your employer pays you.
- Your share of a tip-splitting or tip-pooling arrangement.
- Noncash tips, like tickets or passes.
Service charges that your employer pays you as wages aren't tips. They're wages.
What to keep
The IRS says to keep a tip diary, or copies of documents that show your tips, like bills and charge slips. It used to point people to Form 4070-A for this. Publication 531 now says that form and Form 4070 were made historical, so there's no required form for your daily record.
The IRS doesn't say how to format your diary, so use whatever you'll actually keep up with. For each shift it helps to note:
- The date and which job it was.
- Cash tips and card tips, kept separate.
- Your share of any tip pool.
- Tips you paid out to coworkers.
- Hours worked, and your sales if you tip out a percent of them.
Writing tips down the day you earn them is far easier than rebuilding a month from memory, and it gives you something to compare against your W-2 in January.
Reporting to your employer
- If your tips from one job total $20 or more in a month, you report them to your employer.
- The deadline is the 10th of the next month. If the 10th lands on a weekend or holiday, it's the next business day.
- Form 4070 isn't required. Your employer may accept a signed, dated statement or an electronic statement.
- If your tips for the month are under $20, you don't report them to your employer. They're still income on your tax return.
If you didn't report all your tips
You owe Social Security and Medicare tax on tips you didn't report to your employer, and you figure it on Form 4137. There's also a penalty of 50% of that tax. You can avoid the penalty if you had reasonable cause, which you show by attaching a statement to your return.
Why it matters more now
For the No Tax on Tips deduction, the IRS only counts qualified tips that show up on your Form W-2, on a Form 1099, or that you reported yourself on Form 4137. If your tips aren't reported anywhere, you can't deduct them. A good record also lets you spot a W-2 that shows less than you actually reported.
Your diary, without the notebook.TipLedger logs cash, card, pool and tip-outs per shift, keeps an edit history for every entry and can produce a monthly report to hand your employer. Free to download.
Questions people ask
Do I have to report tips to my employer?
Yes, if your tips from one job total $20 or more in a month. Report them by the 10th of the following month. Tips under $20 for the month aren't reported to your employer but are still income on your return.
What records should a tipped worker keep?
A tip diary, or copies of documents that show your tips, such as bills and charge slips.
What if I didn't report all my tips to my employer?
You report the Social Security and Medicare tax on the unreported tips on Form 4137. There's a penalty of 50% of the tax owed, which can be avoided with reasonable cause.
Sources
- IRS Publication 531, Reporting Tip Income (December 2024)
- Form 4137, Social Security and Medicare Tax on Unreported Tip Income
- 2025 Schedule 1-A (Form 1040)
- IRS: Final regulations listing tipped occupations (IR-2026-49)
Last checked against these sources on October 21, 2026.