What Is Form 4070A: Employee's Daily Record of Tips?

Form 4070A is a tax form distributed by the Internal Revenue Service (IRS) that employees can use to keep track of the tips they receive from customers at work and report them to their employer. Form 4070A is similar to a workbook, with spaces for an employee to indicate the total amount of tips received from patrons.

Tips can include cash left by customers, tips that customers add to debit or credit card charges, and tips paid to an employee by other employees through tip sharing, tip pooling, or other arrangements. Workers should record the total amount of tips they paid to other employees and the names of employees to whom the tips were paid.

Key Takeaways

  • Employees use Form 4070A to keep track of the tips they receive from customers and report the total to their employer each month.
  • Workers should also record the total amount of tips they paid to other employees and the names of employees to whom the tips were paid.
  • Employees are not required to use Form 4070A to keep track of their tip income, but the form is provided by the IRS as a convenient way to do so.
  • Workers who don't report their tips to employers using Form 4070A must calculate and pay Social Security and Medicare taxes on unreported tips when filing their tax returns, using Form 1040 and Form 4137.

Who Can File Form 4070A: Employee's Daily Record of Tips?

Form 4070A is a voluntary form that employees can use to keep a daily record of tips received to report the total to their employer each month.Workers who do not report their tips to employers using Form 4070A must calculate and pay Social Security and Medicare taxes on the unreported tips when filing their tax returns, using Form 1040 and Form 4137: Social Security and Medicare Tax on Unreported Tip Income.

Records of tip income should be kept for as long as the information on them may be needed in the administration of any Internal Revenue law.

How to Fill Out Form 4070A: Employee's Daily Record of Tips

Form 4070A should be distributed to employees by the employer or accessed via IRS Publication 1244, which contains a year's supply of the form. Form 4070A has space for daily entries and helps the employee total up tips for the month.

An employer must withhold income, Social Security, and Medicare taxes on tips, and usually deduct the withholding due to tips from an employee's regular wages. IRS Publication 531: Reporting Tip Income provides more details about keeping a daily record of tips.

Form 4070A

All pages of Form 4070A are available on the IRS website.

Special Considerations for Form 4070A: Employee's Daily Record of Tips

Occasionally, instead of a cash or credit card tip, a customer may give an employee a non-cash tip, such as tickets to a sporting event or other item of value. For tax purposes, workers do not have to report non-cash tips to their employers or on a Form 4070A. However, the IRS considers non-cash tips as income. So, if a customer tips an employee with two bottles of wine valued at $50 each, the worker must claim that $100 value as income when they file their tax return.

This requires workers to keep reliable proof of the tip income they received, such as copies of restaurant bills and credit card charges that show the amounts customers added as tips. Tips not reported to an employer as required may result in a penalty of 50% of the Social Security and Medicare taxes that are due on the unreported tips.