How to track tips for taxes (US, Canada and UK)

To track tips for taxes, write down your tips every shift: cash, card, what came from a pool, what you tipped out and to whom, and your hours. Keep that record with your tax return. What you do with it depends on where you work, so the US, Canada and the UK each get their own section below.

Each section was checked against IRS, CRA and GOV.UK pages on October 30, 2026.

The longer answer

Who reports your tips, and how, depends on the country:

• US: once your cash and card tips reach $20 in a month from one job, you report them to that employer by the 10th of the next month (Publication 531), and they go on your W-2.
• Canada: tips your employer controls go on your T4. Tips customers give you directly are yours to add up and report (CRA).
• UK: tips paid through payroll or a tronc are taxed for you. Cash handed to you directly is yours to tell HMRC about (GOV.UK).

Wherever you have to report tips yourself, your own daily record is what you report from, and it's what you check your employer's figures against. Log every shift, total each month, and compare at year end.

What to write down every shift

The IRS's Publication 531 lists what a daily tip record should hold, and it's a sensible list wherever you work:

• The date, and which job if you have more than one
• Cash tips
• Card tips
• The value of any noncash tips, like tickets
• Tips you got from a pool or coworkers
• Tips you paid out to others, and who got them

Add your hours too, so the record also tells you what you earn per hour.

Say you close a Friday with $85 cash, $210 on cards, $40 from the pool, and you tip out $30 to the bar. That's one line: $85, $210, $40 in, $30 out to the bar, 7 hours. Your tips for the night come to $305.

Write it before you leave, while the checkout slip is in front of you. Notebook, spreadsheet or app, any of them works if every shift gets its line.

The monthly and yearly routine

1. Every shift: one line, as above.
2. Every month: for each job, add cash, card and pool tips received, then subtract what you tipped out. In the US, that total is what you report to your employer.
3. At year end: total the year for each job and compare it with what your employer reported (see your country below).
4. Keep it: store the record, and any copies of reports you gave your employer, with that year's return.

United States

Keep a daily record

The IRS says tipped employees must keep a daily tip record, and Publication 531 says all tips you receive are income subject to federal income tax. Forms 4070 and 4070A are listed as historical. Publication 531 says a tip diary works, or keeping documents like restaurant bills and card slips. If your employer has an electronic system, keep a paper copy of what you enter.

Report to your employer every month

If you get $20 or more in tips in a month from one job, report them to that employer by the 10th of the next month, per Publication 531. That covers cash, check, and debit and credit card tips, plus tips coworkers pass to you. Tips you pass on to others aren't included.

Catch anything you missed

Cash and card tips of $20 or more in a month from one job that you didn't report to your employer go on Form 4137 with your return, and you pay the employee share of Social Security and Medicare on them, per the IRS tip reporting page. Publication 531 warns of a possible penalty of 50% of that Social Security and Medicare tax, unless you have reasonable cause.

Months under $20, and noncash tips, are handled differently: Publication 531 has you add them to the wages on your return.

Check your W-2

From 2026 pay, the W-2 has a new box 12, code TP, which shows the cash tips you reported to your employer (in IRS terms, that includes card tips). Compare it with your own yearly total for that job.

It matters more now because of the federal tip deduction for 2025 through 2028. It's worth up to $25,000 of qualified tips a year, phases out above $150,000 of modified AGI ($300,000 joint), and needs a valid Social Security number and a joint return if you're married, per the IRS explainer.

Your job also has to be on the IRS's list of tipped occupations, and the tips have to be on a W-2, a 1099 or another statement, or reported by you on Form 4137, according to the Schedule 1-A page.

Delivery and rideshare

If you work through an app as an independent contractor, the IRS says gig income must be reported even if it isn't on a 1099, including income paid in cash. Your daily log is how you know the real total.

Canada

All tips are income

The CRA says the tips you earn are income you must report in full on your income tax and benefit return. It asks you to track your tips through the year and keep a copy of your tracking document.

Controlled tips and direct tips

The CRA splits tips into two kinds:

• Controlled tips are ones your employer controls or possesses and then pays you. They're on your T4 in box 14, with tax, EI and CPP taken off, and go on line 10100.
• Direct tips are ones the customer pays straight to you. Your employer doesn't report them or deduct anything, and you report the year's total on line 10400.

Two details decide which is which, per the CRA's CPP and EI page on tips. A card tip counts as direct when your employer hands you the full tip in cash at the end of the shift. Pooled tips are direct when the staff decide the split, and controlled when the employer sets the formula.

Quebec is different: in regulated Quebec establishments, employees have to declare their direct tips to their employer. If that's you, check your T4 and ask your employer how those tips were handled.

Your daily record is where the line 10400 total comes from. Noting how each tip reached you (cash, card paid out in cash, pool and who split it) makes that total easy to work out.

No CPP is taken off direct tips. If you want to pay CPP contributions on them, the CRA lets you elect to on Form CPT20.

United Kingdom

You pay Income Tax on any tips and may pay National Insurance, per GOV.UK's guide to tips and tax. How the tax is collected depends on how the tips reach you:

• Through payroll, such as discretionary tips customers add to their bill: tax comes off when you're paid, and you don't need to report them.
• Through a tronc: you don't need to report these yourself either.
• Cash handed to you directly: you tell HMRC, through Self Assessment, your personal tax account or by phone. HMRC may change your tax code so the tax comes out of your pay. There's no National Insurance on these.

GOV.UK also asks you to update HMRC if your tips change substantially. A running weekly total of cash tips in pounds is the simplest way to know what to tell them, and to notice when it's moved.

Mistakes that cause trouble

• Logging only paper cash. In the US, card tips are reported to your employer too.
• Writing down tips you kept but not what you tipped out, or to whom.
• Mixing two jobs together. In the US, reporting to your employer is per job.
• Filling in a whole month at once from memory.
• Throwing the record away after you file.

Keeping the record in Tipling

Full disclosure: Tipling is our app.

• Each shift has its own fields for cash, card, tip-out and tip-in, and the stats screen totals them by month.
• Say the shift instead of typing it ("close, 7 hours, 85 cash, 210 card, tipped out 30") and check what it filled in. Voice logging is part of Pro and works in English.
• Every job is tracked on its own (two jobs free, unlimited in Pro).
• The PDF income report (Pro) has your totals, a breakdown by job, a month-by-month table and a daily record of your tips, ready for your tax preparer or for checking your employer's figures. CSV export is Pro too.
• It works in 50 currencies, including US and Canadian dollars and pounds.

Tipling doesn't calculate tax, fill in any form or file anything, and it doesn't connect to your bank or POS. It's your record. See the Tipling home page for everything it does.

FAQ

Do I have to report cash tips?

Yes, though where they go differs. US workers report them to their employer once they reach $20 in a month from one job, per Publication 531. Canadian direct cash tips go on line 10400 of your return, per the CRA.

In the UK, cash handed to you directly is reported to HMRC, per GOV.UK.

What's the best way to keep a tip record?

Whatever you'll use every shift. Publication 531 says a tip diary or your bills and card slips will do in the US, and a notebook, spreadsheet or app can hold the same details: date, cash, card, noncash tips, pool and tip-out with names.

How long should I keep my tip records?

Keep them with that year's tax return. How long a tax agency can ask about a return depends on the country and your situation, so check with a tax professional if you're unsure.

Do tips from a tip pool count?

Yes, they're part of your tips. In the US, tips coworkers pass to you are reported to your employer and tips you pass on aren't, per Publication 531. In Canada, who decides the split decides whether pooled tips are direct or controlled, per the CRA.

I'm in Canada. Are tips on my T4 already counted?

Controlled tips, the ones your employer controls or possesses, are on your T4. Direct tips aren't, and you report them on line 10400, per the CRA.