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Payroll Taxes

  1. FUTA
  2. Form 4070
  3. Gross-Up

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Overview Of Form 4070: Employee's Report of Tips to Employer

Updated: February 20, 2023

Overview Of Form 4070: Employee’s Report of Tips to Employer is one of the many IRS forms.

Due to the sheer number of IRS forms, it can be difficult to know exactly where you stand.

Read on as we give you a full breakdown of this form, as well as its purpose, who can file it, how to file it, and answer some of your frequently asked questions. 

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    • When reporting gratuities to their employers, employees who are paid by tips utilize Form 4070.
    • The form must be submitted by the tenth day and must include information on any tips that total more than $20 per month.

    What Is Form 4070?

    Form 4070: Employee’s Report of Tips to Employer is an Internal Revenue Service (IRS) tax form that is sent to taxpayers. This form is used by employees to report tip money to their employers after receiving tips from customers. 

    Tips may be accepted in cash from customers, through a tip-sharing scheme, or by way of credit or debit cards.

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    What Is the Purpose of Form 4070?

    Form 4070 is used in conjunction with Form 4070A to provide a monthly overview of all tips received. The use of this form enables staff to record daily tips received. Additionally, it enables employers to figure out how much tax must be deducted from employee paychecks. 

    Employers are obligated to deduct federal income taxes from employee tip income as well as Social Security and Medicare taxes. These taxes may be deducted from the employee’s pay or in another way.

    Who Can File Form 4070?

    Employees who receive tips must file Form 4070: Employee’s Report of Tips to Employer. Every gratuity that is over $20 must be disclosed. Unless that day is a holiday or weekend, these need to be sent in with their report by the tenth day of the following month. Form 4070A is used to total up daily tips.

    How to File Form 4070

    The form must include the names of employees, their addresses, their Social Security numbers, and the month to which the report pertains to. As well as the complete total amount of tips collected for the employee. It must also include the name and address of the employer. The employee must sign the report after completing it.

    Employees may submit a substitute document that includes all of this information in place of submitting the actual form.

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    What Are the Eligibility Criteria for Form 4070?

    This form is used by employees to report tip money to their employers after receiving tips from customers. Any person who works in the service industry or another industry that receives tips is eligible to file Form 4070. 

    A company must ensure that the overall income it reports for a given time period equals at least 8% of the total receipts for that period. It’s not necessary to factor all revenues into this calculation. For instance, sales for takeout and those with a service charge of at least 10% are not included.

    Example of Form 4070

    Let’s say that a waiter makes $550 in September from their tips. This waiter would then have to fill out Form 4070 and declare this income to the IRS.

    However, let’s say that another waiter only makes $14 in September. As this is beneath the threshold of $20, they would not have to file Form 4070. 


    Anyone who works in the service industry will know that there are few things better than leaving a bar or restaurant after a successful tip night. But it is still vital that you keep a track of these tips so that you can report them to the IRS.

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    FAQS on Form 4070

    What Happens if You Don’t Report Cash Tips?

    For failing to record or under report tips of any size, the IRS will impose a fine. The fine is equal to half of what would have been owed in Social Security and Medicare taxes if the tips had been disclosed.

    How Much of Your Tips Should You Claim?

    Any waiter who receives more than $20 in tips per day must file a tip claim with the IRS. When tax season arrives, properly claiming tips ensures that you won’t owe a sizable quantity of money. Additionally, it enables you to escape audits and obtain financing for expensive purchases.

    Do People Actually Report Their Tips?

    Yes, they do. Remember that it is illegal to not claim your tips. A handy way to keep track of tips is by keeping a daily record of what tips you have made on a typical business day. That way you can keep track of tips monthly far easier. 

    How Do You Prove Tips as Income?

    On your income tax return and on Form 4070, you must disclose all tips you received, including cash and noncash ones. Your Form W-2, Wage, and Tax Statement, box 1 wages include any tips you reported to your employer.

    How Does Claiming Tips Affect Your Paycheck?

    A part of an employee’s tips may be used for an employer’s minimum wage obligation under the Fair Labor Standards Act (FLSA). Employers are not permitted to remove tip credits from an employee’s wages in any circumstances. Instead, they are permitted to deduct a specific sum from their required minimum payment.

    Payroll Taxes

    1. FUTA
    2. Form 4070
    3. Gross-Up


    553 HRS


    $ 7000




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