IRS Form 4070, Employee's Report of Tips to Employer , is a form used by employees receiving tips to report them to their employers. The employer needs this information for proper tax withholding and to report the employee's earnings to the Social Security Administration (SSA). The most recent version of this form was issued by the Internal Revenue Service (IRS) on August 1, 2005 . A fillable IRS Form 4070 is available for download below.
IRS Form 4070 should be used in conjunction with IRS Form 4070A, Employee's Daily Record of Tips. This form is used to keep track of tips received every day. Using IRS Form 4070A is voluntary. The employee can keep their own daily tips record, as long as it contains the number of cash tips, tips from credit and debit cards, the value of noncash tips, and the number of tips paid to other employees through tip pools or splitting.
Tips are subjected to the federal income tax and should be properly reported regardless of the employee's wages. The employee should report cash, credit, and debit card tips to their employer every month or in shorter time periods. The annual tax return should contain the amount of tips received during the year in cash, via cards, and in items of value, such as tickets, passes, etc. If tips are shared between employees, each of them should report only the part they received. If the employee received tips less than $20, they do not have to report them.
The employee must also report their allocated tips on their tax return. Refer to the IRS-released detailed instructions on what the allocated tips are, how they are calculated and in which cases your employer is obliged to allocate tips. The employee should report tips by the 10th day of the month following the month that the tips were received. If the 10th day of this month is a Saturday, Sunday, or a legal holiday, the tips should be reported on the next business day.
If the employee does not report tips, they are subject to a penalty equal to 50% of all taxes owed on the unreported tips. However, if the employee shows a reasonable cause for not reporting tips to their employer and provides a supporting statement, they can avoid the penalty. Additional information and instructions for completing the IRS Form 4070 can be found in IRS Publication 531.