How to track cash tips (a simple routine that works)

To track cash tips, count them at the end of every shift, the same way each time, and write one line before you leave: the date, your cash tips, what you tipped out and to whom, and your hours. Add the lines up each month. Card tips leave a record on their own. Cash only exists in your notes.

Below is a routine that takes a minute a shift, plus what to do with the totals in the US, Canada and the UK.

The longer answer

Card tips show up on your checkout report and, usually, your paycheck. Cash doesn't. Once it's in your pocket and then your wallet, there's no slip that says how much of it was tips, how much was change, and how much went to the bar.

That's why the count matters more than the tool. Pick one way to count, do it before you leave, and write the number down while it's still in front of you. A notebook, a spreadsheet and an app all work if every shift gets its line.

Tax agencies expect this record. The IRS says all tips are income, and its Publication 531 describes a daily record of cash tips, card tips and anything shared through a pool.

In Canada, the CRA asks you to track your tips, keep a copy of your tracking document and report direct tips on your return.

In the UK, GOV.UK says tips customers give you directly are yours to report to HMRC.

Step 1: Count the same way every shift

How you count depends on how cash reaches you.

If you carry a bank (most servers and bartenders)

1. Write down your starting bank before the shift, say $100.
2. At the end, take out what you owe the house for cash sales. Your checkout report shows it.
3. Take out the starting bank.
4. What's left is your cash tips before tip-out.

If your checkout pays your card tips out of the cash you owe, take those out too, or you'll count them twice.

Example: you end with $412 in cash, owe the house $226 for cash sales, and started with a $100 bank. Your cash tips are $412 − $226 − $100 = $86.

If tips go in a jar or pool

Write down your share when the pool is split, and who split it. If the pool includes card tips paid out in cash, note that too, so you don't count the same money twice.

If customers hand you cash (delivery, valet, salon)

Keep tip cash in its own pocket or envelope during the shift, separate from your own money. Count it once at the end.

Step 2: Write one line before you leave

Each shift gets one line with:

• Date, and which job if you have more than one
• Cash tips (before tip-out)
• Card tips, from your checkout report
• Cash you tipped out, and who got it
• Cash you got from a pool or a coworker
• Hours

Using the example above, with $35 cash tipped out to the bar and busser and 6 hours: $86 cash, $164 card, $35 out (bar and busser), 6 hours.

Snap a photo of your checkout slip with the line. It takes two seconds and gives you something to check against later. Publication 531 counts restaurant bills and card slips as supporting documents.

Step 3: Total it every month

On the first of the month, add up the lines for each job: cash tips, card tips, pool tips received, and tips paid out. That gives you:

• What you actually took home in tips that month
• The number you report to your employer, if you're in the US (below)
• A way to spot gaps, like a week with no lines

What to do with the totals

United States

Per Publication 531, if your tips reach $20 or more in a month from one job, report them to that employer by the 10th of the next month. That covers cash, check and card tips plus tips coworkers pass to you, but not tips you pass on to others. Reported tips end up on your W-2.

If you got $20 or more in cash and card tips in a month from one job and didn't report all of them to your employer, the unreported amount goes on Form 4137 with your return. You pay the employee share of Social Security and Medicare on it, per the IRS's tip reporting page.

Publication 531 adds that tips you didn't report to your employer can bring a penalty of 50% of that Social Security and Medicare tax, unless you have reasonable cause.

You don't have to report tips from a month under $20 to your employer, but they're still income on your return, per Publication 531.

Canada

Cash a customer gives you directly is a direct tip. If your employer controls your tips, the CRA says they should already be on your T4 slip, and if you're not sure, ask your employer.

The CRA also asks you to track your tips and keep a copy of your tracking document, and to report direct tips on line 10400 of your return. Your monthly totals add up to that line.

United Kingdom

Cash handed to you directly is reported to HMRC yourself, through Self Assessment, your personal tax account or by phone, per GOV.UK. There's no National Insurance on these tips. A running weekly total in pounds tells you what figure to give.

Mistakes that make cash hard to prove

• Putting tip cash in your wallet with your own money before you've counted it.
• Writing down only what you kept, not what you tipped out. Your record then won't match what anyone else saw.
• Catching up once a month from memory instead of the same night.
• Counting pool cash twice: once as cash, again as your pool share.
• Throwing the notebook away after you file. Keep it with your tax records.

Tracking cash tips in Tipling

Full disclosure: Tipling is our app, built for logging right after a shift.

Each shift has separate fields for cash tips, card tips, tip-out and tip-in, plus hours, so the cash line above takes a few taps. With Pro you can say it instead: "dinner, 6 hours, 86 cash, 164 card, tipped out 35" and check what it filled in (English only).

Stats break your tips down by week, month or year, cash and card separately, for each job. At year end the PDF income report (Pro) gives a month-by-month table and day-by-day detail of your tips, ready to check against your W-2 or hand to a tax preparer.

Tipling doesn't calculate tax, file anything or connect to your bank or POS. It's your record. See the Tipling home page for the whole app.

FAQ

Do I have to report cash tips?

Yes, cash tips are income. In the US, once your total tips (cash and card) from one job reach $20 in a month, you report them to your employer by the 10th of the next month, per Publication 531.

Canadian direct tips go on line 10400 of your return, per the CRA. In the UK, cash tips handed to you directly are reported to HMRC, per GOV.UK.

What's the easiest way to track cash tips?

Count them the same way at the end of every shift and write one line before you leave. A notebook works. An app or spreadsheet saves you adding it up later.

Should I count cash tips before or after tip-out?

Write down both: the cash you got, and what you tipped out and to whom. That way your record shows the full picture and matches what your coworkers and employer saw.

Do I need to keep receipts for cash tips?

There's usually no receipt for cash itself. A daily log plus your checkout slips or bills is the record. In the US, Publication 531 lists a tip diary or documents like bills and card slips as ways to keep it.

What if I forgot to track cash tips for a while?

Start today and rebuild the missing weeks as best you can from checkout reports, bank deposits and your schedule. A tax professional can help you decide what to report for the gap.