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US Internal Revenue Service: p531 - 1999
US Internal Revenue Service: p531 - 1999
Income
Introduction
For use in preparing This publication is for employees who receive tips from
customers. If you are self-employed and receive tip in-
1999 Returns come, see Publication 334, Tax Guide for Small Busi-
ness, for more information.
All tips you receive are income and are subject to
federal income tax. You must include in gross income
all tips you receive directly from customers, tips from
charge customers that are paid to you by your em-
ployer, and your share of any tips you receive under a
tip-splitting or tip-pooling arrangement.
The value of noncash tips, such as tickets, passes,
or other items of value are also income and subject to
tax.
Reporting your tip income correctly is not difficult.
You must do three things.
• Your employer can withhold federal income tax and Penalty for not reporting tips. If you do not report tips
social security and Medicare taxes or railroad re- to your employer as required, you may be subject to a
tirement tax, penalty equal to 50% of the social security and Medi-
care taxes or railroad retirement tax you owe on the
• Your employer can report the correct amount of your unreported tips. (For information about these taxes, see
earnings to the Social Security Administration or Reporting social security and Medicare taxes on tips
Railroad Retirement Board (which affects your ben- not reported to your employer under Reporting Tips
efits when you retire or if you become disabled, or on Your Tax Return, later.) The penalty amount is in
your family's benefits if you die), and addition to the taxes you owe.
• You can avoid the penalty for not reporting tips to You can avoid this penalty if you can show reason-
your employer (explained later). able cause for not reporting the tips to your employer.
To do so, attach a statement to your return explaining
What tips to report. Report to your employer only why you did not report them.
cash, check, or credit card tips you receive.
If your total tips for any one month from any one job Giving your employer money for taxes. Your regular
are less than $20, do not report them to your employer. pay may not be enough for your employer to withhold
Do not report the value of any noncash tips, such all the taxes you owe on your regular pay plus your
as tickets or passes, to your employer. You do not have reported tips. If this happens, you can give your em-
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Sample Filled-in Form 4070 from Publication 1244
Form 4070 Employee’s Report
(Rev. July 1996)
Department of the Treasury
of Tips to Employer OMB No. 1545-0065
Internal Revenue Service 䊳 For Paperwork Reduction Act Notice, see back of form.
Employee’s name and address John W. Allen Social security number
117 Maple Ave.
Anytown, NY 14202 987 00 4321
Employer’s name and address (include establishment name, if different) 1 Cash tips received
1,024.00
Diamond Restaurant 2 Credit card tips received
834 Main Street 519.20
Anytown, NY 14203 3 Tips paid out
273.60
Month or shorter period in which tips were received 4 Net tips (lines 1 + 2 - 3)
from October 1 , 19 99 , to October 31 , 19 99 1,269.60
Signature Date
John W. Allen Nov. 6, 1999
ployer money until the close of the calendar year to pay employer for 1999 are included in the wages shown in
the rest of the taxes. box 1 of your Form W–2. Add to the amount in box 1
If you do not give your employer enough money, your only the tips you did not report to your employer.
employer will apply your regular pay and any money
you give to the taxes, in the following order: If you received $20 or more in cash and charge
Date Date
tips of
a. Tips received
directly from customers
b. Credit card tips c. Tips paid out to d. Names of employees to whom you • You worked in a restaurant, cocktail lounge, or
received other employees paid tips
rec’d. entry
16 10/16
and other employees
41.20 18.40 8.80 Judy Brown
similar business that must allocate tips to employ-
17 10/18 39.20 21.20 9.60 Judy Brown ees, and
18 10/19 46.80 12.80 8.40 Carl Jones
19 10/21 34.00 19.20 10.00 Judy Brown • The tips you reported to your employer were less
20 10/21 - OFF -
21 10/22 34.80 26.00 12.80 Judy Brown & Brian Smith than your share of 8% of food and drink sales.
22 10/24 42.40 22.80 12.40 Carl Jones
23
24
10/24
10/25
48.80
33.60
17.20
19.20
13.60
10.80
Judy Brown
Brian Smith
If your employer allocated tips to you, they are shown
25 10/26 37.20 14.80 9.20 Judy Brown separately in box 8 of your Form W–2. They are not
358.00 171.60 95.60
Subtotals
included in box 1 with your wages and reported tips. If
box 8 is blank, this discussion does not apply to you.
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Index
A M T
Allocated tips ........................... 4 More information ..................... 5 Tax help (See More information)
Assistance (See More information) Tip record ................................ 1
Tip splitting .............................. 2
F P Tips not reported to
Publications (See More employer:
Form ............................ 2, 3, 4, 5 Penalty on ............................ 2
information)
1040–ES .............................. 3 Social security and Medicare
4070 ..................................... 2 taxes on ............................ 4
4070A ................................... 2
4137 ..................................... 4
R TTY/TDD information .............. 5
Reporting tips on tax return .... 3
8027 ..................................... 5
Reporting tips to your employer 2 U
Free tax services ..................... 5
Uncollected social security and
Medicare tax on tips ............ 2
H S 䡵
Help (See More information) Service charge ........................ 2
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See How To Get More Information for a variety of ways to get publications,
Tax Publications for Individual Taxpayers including by computer, phone, and mail.
General Guides 530 Tax Information for First-Time 901 U.S. Tax Treaties
Homeowners 907 Tax Highlights for Persons with
1 Your Rights as a Taxpayer 531 Reporting Tip Income Disabilities
17 Your Federal Income Tax (For 533 Self-Employment Tax 908 Bankruptcy Tax Guide
Individuals) 534 Depreciating Property Placed in 911 Direct Sellers
225 Farmer’s Tax Guide Service Before 1987 915 Social Security and Equivalent
334 Tax Guide for Small Business 537 Installment Sales Railroad Retirement Benefits
509 Tax Calendars for 2000 541 Partnerships 919 How Do I Adjust My Tax Withholding?
553 Highlights of 1999 Tax Changes 544 Sales and Other Dispositions of 925 Passive Activity and At-Risk Rules
595 Tax Highlights for Commercial Assets 926 Household Employer’s Tax Guide
Fishermen 547 Casualties, Disasters, and Thefts 929 Tax Rules for Children and
910 Guide to Free Tax Services (Business and Nonbusiness) Dependents
550 Investment Income and Expenses 936 Home Mortgage Interest Deduction
Specialized Publications 551 Basis of Assets 946 How To Depreciate Property
552 Recordkeeping for Individuals 947 Practice Before the IRS and Power
3 Armed Forces’ Tax Guide 554 Older Americans’ Tax Guide of Attorney
378 Fuel Tax Credits and Refunds 555 Community Property 950 Introduction to Estate and Gift Taxes
463 Travel, Entertainment, Gift, and Car 556 Examination of Returns, Appeal 967 IRS Will Figure Your Tax
Expenses Rights, and Claims for Refund 968 Tax Benefits for Adoption
501 Exemptions, Standard Deduction, 559 Survivors, Executors, and
and Filing Information 970 Tax Benefits for Higher Education
Administrators 971 Innocent Spouse Relief
502 Medical and Dental Expenses 561 Determining the Value of Donated
503 Child and Dependent Care Expenses 972 Child Tax Credit
Property 1542 Per Diem Rates
504 Divorced or Separated Individuals 564 Mutual Fund Distributions
505 Tax Withholding and Estimated Tax 1544 Reporting Cash Payments of Over
570 Tax Guide for Individuals With $10,000
508 Tax Benefits for Work-Related Income From U.S. Possessions
Education 1546 The Taxpayer Advocate Service of
575 Pension and Annuity Income the IRS
514 Foreign Tax Credit for Individuals 584 Casualty, Disaster, and Theft Loss
516 U.S. Government Civilian Employees Workbook (Personal-Use Property) Spanish Language Publications
Stationed Abroad 587 Business Use of Your Home
517 Social Security and Other (Including Use by Day-Care 1SP Derechos del Contribuyente
Information for Members of the Providers) 579SP Cómo Preparar la Declaración de
Clergy and Religious Workers 590 Individual Retirement Arrangements Impuesto Federal
519 U.S. Tax Guide for Aliens (IRAs) (Including Roth IRAs and 594SP Comprendiendo el Proceso de Cobro
520 Scholarships and Fellowships Education IRAs) 596SP Crédito por Ingreso del Trabajo
521 Moving Expenses 593 Tax Highlights for U.S. Citizens and 850 English-Spanish Glossary of Words
523 Selling Your Home Residents Going Abroad and Phrases Used in Publications
524 Credit for the Elderly or the Disabled 594 Understanding the Collection Process Issued by the Internal Revenue
525 Taxable and Nontaxable Income 596 Earned Income Credit (EIC) Service
526 Charitable Contributions 721 Tax Guide to U.S. Civil Service 1544SP Informe de Pagos en Efectivo en
Retirement Benefits Exceso de $10,000 (Recibidos en
527 Residential Rental Property una Ocupación o Negocio)
529 Miscellaneous Deductions
See How To Get More Information for a variety of ways to get forms, including by computer,
Commonly Used Tax Forms fax, phone, and mail. For fax orders only, use the catalog numbers when ordering.
Catalog Catalog
Form Number and Title Number Form Number and Title Number
1040 U.S. Individual Income Tax Return 11320 2106 Employee Business Expenses 11700
Sch A & B Itemized Deductions & Interest and 11330 2106-EZ Unreimbursed Employee Business 20604
Ordinary Dividends Expenses
Sch C Profit or Loss From Business 11334 2210 Underpayment of Estimated Tax by 11744
Sch C-EZ Net Profit From Business 14374 Individuals, Estates, and Trusts
Sch D Capital Gains and Losses 11338 2441 Child and Dependent Care Expenses 11862
Sch D-1 Continuation Sheet for Schedule D 10424 2848 Power of Attorney and Declaration 11980
Sch E Supplemental Income and Loss 11344 of Representative
Sch EIC Earned Income Credit 13339 3903 Moving Expenses 12490
Sch F Profit or Loss From Farming 11346 4562 Depreciation and Amortization 12906
Sch H Household Employment Taxes 12187 4868 Application for Automatic Extension of Time 13141
Sch J Farm Income Averaging 25513 To File U.S. Individual Income Tax Return
4952 Investment Interest Expense Deduction 13177
Sch R Credit for the Elderly or the Disabled 11359
Sch SE Self-Employment Tax 11358 5329 Additional Taxes Attributable to IRAs, Other 13329
Qualified Retirement Plans, Annuities,
1040A U.S. Individual Income Tax Return 11327 Modified Endowment Contracts, and MSAs
Sch 1 Interest and Ordinary Dividends for 12075 6251 Alternative Minimum Tax–Individuals 13600
Form 1040A Filers
Sch 2 Child and Dependent Care 10749 8283 Noncash Charitable Contributions 62299
Expenses for Form 1040A Filers 8582 Passive Activity Loss Limitations 63704
Sch 3 Credit for the Elderly or the 12064 8606 Nondeductible IRAs 63966
Disabled for Form 1040A Filers 8812 Additional Child Tax Credit 10644
1040EZ Income Tax Return for Single and 11329 8822 Change of Address 12081
Joint Filers With No Dependents 8829 Expenses for Business Use of Your Home 13232
1040-ES Estimated Tax for Individuals 11340 8863 Education Credits 25379
1040X Amended U.S. Individual Income Tax Return 11360
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