This publication is for employees who receive tips from
customers. If you are self-employed and receive tip income,
see Publication 334, Tax Guide for Small Business, 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 employer,
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.
1) Keep a daily tip record.
2) Report tips to your employer.
3) Report all your tips on your income tax return.
This publication will show you how to do these three
things, and what to do on your tax return if you have
not done the first two. This publication will also show
you how to treat allocated tips.