IRS Form 4070 and 4070A
IRS Form 4070A can be used with the IRS Form 4070, Employee's Report of Tips to Employer. This form is used to report tips received in a month or any other period of time, as it is required by the employer. The daily record of tips is used to facilitate monthly tips report.
IRS Form 4070A Instructions
The employer requires tips reporting to withhold taxes from your paycheck properly and report the employee's earnings correctly to the Social Security Administration (SSA). Proper reporting of income will affect the benefits the employee will receive after retirement.
Using IRS Form 4070A is voluntary. If the employee desires, they can keep their own record of tips. This record must include their name and the name of their employer, the number of tips received in cash, added to debit and credit card charges and tips they paid to other employees through tip sharing. If the establishment uses an electronic system to record tips, the employees must keep a record on paper anyway.
If tips are not reported to the employer, this may lead to a penalty of 50% of the Social Security and Medicare taxes that are due on the unreported tips. However, the penalty can be avoided, if the employee can prove that they had a reasonable cause for non-reporting their tips.
Additional information and instructions for completing the IRS Form 4070A can be found in the IRS Publication 531.
- 1 to 5. Self-explanatory;
- Column A, Tips received directly from customers and other employees. Enter the number of tips you received in cash from customers or other employees;
- Column B, Credit and debit card tips received. Enter the amount of tips you received from debit and credit card charges;
- Column C, Tips paid out to other employees. Enter the amount of tips you paid to other employees through tip sharing, tip pooling or other arrangements;
- Column D, Names of employees to whom you paid tips. Enter the names of every employee you paid tips to, entered in the previous column;
- Calculate the subtotal for every page of the form;
- When you complete the daily records for a month, calculate the totals for each column and transfer the data to your monthly record.