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13130: 1040 - Reporting Tip Income


1040 Individual

Does a taxpayer have to report tips on a tax return? In data entry do I have to enter the amounts shown in boxes 7 and 8 of Form W-2?

The IRS advises taxpayers which tips must be reported in Publication 531 Reporting Tip Income. The taxpayer may find Publication 3148, Tips on Tips, a Guide to Tip Income Reporting useful as well.

Form W-2

See the General Instructions for Forms W-2 and W-3. for details on what should appear on Form W-2. Enter the form in Drake Tax on the W2 screen. 

Form 4137, Social Security And Medicare Tax On Unreported Tip Income

Form 4137 is used to figure and report the social security and Medicare tax owed on tips the taxpayer did not report to the employer, including any allocated tips shown on the taxpayer's W-2 that must be reported as income.  By filing this form (screen 4137), social security and Medicare tips will be credited to the taxpayer's social security record, which is used to figure benefits. See Form 4137 and instructions

Form 8919, Uncollected Social Security And Medicare Tax On Wages

Form 8919 is used to figure and report the taxpayer's share of uncollected social security and Medicare taxes due on compensation if the taxpayer was an employee but treated as an independent contractor by the employer. By filing this form (screen 8919), social security and Medicare tips will be credited to the taxpayer's social security record. See Form 8919 and instructions.

Publication 1244, Employee’s Daily Record Of Tips And Report To Employer

Forms 4070 and 4070A are part of Publication 1244. They help the taxpayer keep track of tips for reporting purposes. Form 4070 is the employee’s report of tips to the employer. Form 4070A is an employee’s daily record of tips. See Publication 1244.

Form 8027, Employer’s Annual Information Return Of Tip Income And Allocated Tips

Form 8027 is used by large food or beverage establishments when the employer is required to make annual reports to the IRS on receipts from food or beverage operations and tips reported by employees. See the Instructions for Form 8027.

Note: Starting in Drake16, Form 8027 is not available in the Drake Tax.


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