If you receive $20 or more in tips in a month at one job, the IRS requires you to report them to your employer by the 10th of the following month. Many restaurants handle this through the point of sale system at clock-out. Form 4070 is the paper version.
Card tips are usually recorded automatically. Cash tips depend on what you enter. Your employer withholds income tax and FICA on reported tips from your wages, which is why tipped paychecks run small.
Reporting accurately builds your Social Security record and gives you proof of income. It also protects you: tip records are how a tip credit shortfall gets shown. If reported tips at a large restaurant run low, see allocated tips.
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