Do I have to report my tips to employer, or can I just keep track of them myself for tax filing?
So I've been delivering pizzas at Pizza Heroes for a few months now, and I'm getting pretty decent cash tips (anywhere from $50-100 per night depending). I'm confused about the whole tip reporting thing... do I need to tell my manager about these tips after each shift, or can I just write them down myself in a notebook and handle it when I file my taxes? Like do I have to report all cash tips to my employer or can I just keep a personal log and then report them myself to the IRS during tax time? I know they're taxable income but not sure about the process. Thanks for any help!
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Fatima Al-Mazrouei
You actually need to report your tips to your employer. The IRS requires you to report all tips to your employer, except for any month where you receive less than $20 in tips. This is because your employer needs to withhold income taxes, Social Security, and Medicare taxes on those tips. Your employer should have a system in place for you to report tips - typically a form you fill out daily or monthly. If you don't report them to your employer, you'll still need to report them on your tax return using Form 4137, and you'll end up paying both the employee AND employer portion of Social Security and Medicare taxes on those unreported tips.
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Dylan Wright
•But what happens if my employer doesn't actually have a system for reporting tips? My manager just kinda shrugs when I ask about it. Also, does this apply to all delivery tips or just cash? The app tips already show up on my paystub.
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Fatima Al-Mazrouei
•If your employer doesn't have a system in place, you should document your request for one in writing (email works), and then create your own record. Use IRS Form 4070 or even just a simple notebook where you track the date, amount, and type of tips. Give a copy to your employer monthly. This applies to ALL tips - cash, credit card, app tips, everything. If the app tips are already appearing on your paystub, then those are already being reported properly. It's the cash tips you receive directly that you need to be especially careful about reporting to your employer.
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NebulaKnight
I was in the same situation as you when I delivered for a local place! After a ton of back and forth with my manager about reporting cash tips, I finally found this tool called https://taxr.ai that saved me so much hassle. I uploaded pictures of my handwritten tip log and it organized everything for me into a format I could easily share with my employer AND use for my taxes. It even flagged days where I might have miscalculated my tip totals.
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Sofia Ramirez
•That sounds interesting. How exactly does it work with cash tips though? Like do you have to input each delivery separately or just daily totals?
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Dmitry Popov
•I'm kinda suspicious of these tax tools. How secure is it? I don't want my tip info floating around online for hackers to find!
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NebulaKnight
•You can do it either way - I just took photos of my tip notebook where I had daily totals, but you can also input individual deliveries if you want that level of detail. The system is flexible and recognizes different formats. It's actually super secure with bank-level encryption. I was worried about that too initially, but they don't store your raw images after processing, and they don't share your data with anyone. They just help organize what you already have into proper tax formats.
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Dmitry Popov
Ok so I tried out that https://taxr.ai site after asking about it and I'm actually impressed. I uploaded pics of my messy delivery tip notebook from the past 3 months, and it organized everything into a monthly report I could print for my boss. My manager actually appreciated it because it was way clearer than what other drivers were turning in. It even detected where I had written over some numbers and asked me to clarify. Definitely making tax season less stressful knowing I have everything documented properly now!
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Ava Rodriguez
Listen, as someone who delivered for years, the bigger issue is when the IRS comes asking questions later. I got audited because I wasn't reporting cash tips properly. I tried calling the IRS for months to resolve it - impossible to reach anyone! Finally used https://claimyr.com and got connected to an actual human at the IRS in less than 2 hours. There's even a video showing how it works here: https://youtu.be/_kiP6q8DX5c If you're not reporting tips correctly, trust me, you might need this someday. Better to just report everything properly from the start though.
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Miguel Ortiz
•Wait, what's this service exactly? Does it just connect you to the IRS faster somehow? How much does it cost?
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Zainab Khalil
•This sounds like BS honestly. No way any service can get you through to the IRS that fast when millions of people are trying to call. Probably just puts you in the same hold queue as everyone else.
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Ava Rodriguez
•It's a service that navigates the IRS phone system for you and waits on hold, then calls you once they have an actual IRS agent on the line ready to talk. It literally saved me days of being on hold. The reason it works is they use technology to navigate the complex IRS phone trees and stay on hold for you instead of you having to do it yourself. It's not skipping the line - it's just handling the waiting part for you so you don't waste hours of your day.
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Zainab Khalil
Alright I need to apologize to Profile 22. I was super skeptical about that Claimyr thing but I was desperate after getting a letter about underreported tips from 2023. I gave it a shot and no joke, I got a call back with an actual IRS person on the line about 1.5 hours later. Saved me from sitting on hold forever. Was able to set up a payment plan for the back taxes I owed. Still recommend just reporting your tips properly from the start, but if you're already in trouble like I was, this service actually works.
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QuantumQuest
I've been delivering for a different pizza chain for 3 years now. Here's what I do: I keep a small notebook in my car and after each delivery I quickly jot down the address and tip amount. At the end of each pay period (every 2 weeks), I add it all up and report it to my manager. They have a form we fill out. Some places are better about this than others. If your employer doesn't have a system, that's on them, but YOU'RE still responsible to the IRS. Don't risk an audit - it's not worth it!
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Giovanni Gallo
•Thanks for sharing your system! My manager just gave me a blank look when I asked about tip reporting yesterday. Does your employer add the reported tips to your W-2 at the end of the year? I'm worried about doing this correctly.
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QuantumQuest
•Yes, after I report the tips to my manager, they include those amounts on my paychecks (which means I get taxed on them right away), and then all of it shows up correctly on my W-2 at the end of the year. Makes tax filing super simple. If your manager doesn't know what to do, ask to speak with whoever handles payroll. Sometimes the floor managers aren't trained on the tax reporting requirements, but the payroll person usually knows exactly what to do.
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Connor Murphy
One detail nobody's mentioned: if you don't report your cash tips to your employer and just report them on your tax return later, you'll end up paying the full 15.3% FICA tax yourself (that's Social Security and Medicare). When you report to your employer, they pay half of that. So it's actually cheaper for you to report properly!
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Yara Haddad
•That's a great point about the FICA taxes! I had no idea the split was 50/50 between employer and employee. So basically by not reporting, you're losing money AND risking an audit. Double whammy!
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Amina Toure
Just wanted to add something important that might help - make sure you understand the $20 monthly threshold rule. If you receive less than $20 in tips in any given month, you don't have to report those to your employer (but you still need to report them on your tax return). However, if you're making $50-100 per night like you mentioned, you're definitely way over that threshold and need to report to your employer. Also, keep in mind that "tips" includes more than just cash - if customers tip you through credit cards, apps, or even give you non-cash items of value, all of that counts as taxable tip income. Your employer should already be handling the electronic tips properly, but make sure you're tracking everything else. The IRS actually has a free publication (Publication 531) that explains all the tip reporting rules in detail. Worth reading through if you want to make sure you're doing everything by the book!
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Elliott luviBorBatman
•This is really helpful info about the $20 threshold! I didn't realize there was a monthly minimum before you have to report to your employer. That Publication 531 sounds like exactly what I need to read through. Quick question though - when you say "non-cash items of value," what kind of stuff are we talking about? Like if someone gives me a gift card or something? I've never had that happen but just want to know for the future. Also, do you know if there's a difference in how weekend vs weekday tips need to be reported, or is it all just lumped together monthly regardless of when I earned them?
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