How to keep tip records for taxes

The short answer

Tips are easy to lose track of. A daily record means that when your employer, a pay stub, or your tax return asks what you made, you are reading from notes you wrote that night instead of guessing. Each workday, write down the date, the tips you received, and the tips you paid out to coworkers. The IRS describes this in Publication 531.

TrackMyTips keeps the core of that record for you: your shifts, hours, wages, tips, tip-outs, and what you actually earned. A few details in the IRS list, like who you tipped out, are worth keeping separately. The sections below show which.

What the IRS suggests you record each workday

Publication 531 says to keep a daily tip record, either as a tip diary or as copies of documents such as restaurant bills and card charge slips. Start it with your name, your employer's name, and the business name if it differs. Then, for each workday:

• The date.
• Cash tips you get directly from customers or from other employees.
• Card tips from credit and debit card customers that your employer pays you.
• Noncash tips, the value of anything you were given instead of money, such as event tickets, passes, or merchandise.
• Tips you paid out to other employees through tip pools or tip splitting, along with the names of the employees you paid.

"Noncash" does not mean card. Credit and debit card tips are money, and the IRS treats them together with cash when it talks about reporting "cash and charge" tips. Noncash tips are the rare gifts of property. Service charges your employer adds and pays you as wages are not tips.

Keeping records, telling your employer, and filing are different jobs

The daily record is for you. Whether and how you report tips to your employer, and what goes on your tax return, are separate steps with their own rules.

• Employer. In general, if you receive $20 or more in tips in a month from one job, you report that month's total to your employer by the 10th of the following month. Tips shared in a pool are reported as the tips you receive and keep, not the ones you pass on. Noncash tips are not reported to your employer.
• Tax return. Tip income is reported with your wages. Tips you never reported to your employer, and noncash tips, are handled on your return. The IRS explains how in Publication 531.

Your situation may differ, for example if your employer runs electronic tip reporting. See IRS Topic 761 and Publication 531, or ask a tax professional.

How TrackMyTips helps

Clock in and TrackMyTips keeps the date, your hours, your role, and the workplace if you have more than one job. Then it records the money:

• Tips. Log each tip as it happens, or one total for the night. If you got tips from a tip pool, a coworker, or a manager, count them like any other tip you received and kept. Just don't enter the same money twice. You can also mark a tip Cash, Card, or Split between the two. Marking is optional, and Reports → "How your tips came in" adds up Cash, Card, and unmarked tips for the range you pick.
• Tip-outs. Enter the total dollars you tipped out for the shift. The app subtracts it from your tips to show what you kept.
• Wages and earnings. Your hourly wage is stored on each shift, so you see wages, net tips, total earnings, and $/hour. Your past shifts stay in the app and roll up on Reports.

Two things to know. TrackMyTips records what customers tipped you. It does not know what your employer later paid you from card charges, so check that against your pay records. And it has no field for noncash tips like tickets or merchandise. Keep a note of those yourself. For the log-it-that-night routine, see how to track tips, or browse TrackMyTips features.

Who you tipped out

The IRS diary includes the names of the employees you paid out. TrackMyTips stores one dollar total per shift, not a list of recipients. If you want names, keep them in a notebook, or jot them in the note on a tip.

The Income History PDF

Reports → Income History totals the completed shifts you recorded for a year, a month, or a custom date range and saves them as a PDF titled "Personal Income Record." It shows total earnings, tips, wages, tip-outs, hours, average hourly earnings, and shift count. A year also gets a month-by-month table.

Think of it as an earnings summary, not a daily tip diary. It does not list individual shifts or tips, split cash from card, or show notes or workplaces. It is not an IRS form, does not prepare a return, and does not decide what you owe. Its footer says TrackMyTips does not provide tax or financial advice.

Keep what you kept straight

Separate what you received from what you gave away. Six hours as Server at $8/hour with $210 in tips and $40 tipped out comes to wages of $48, net tips of $170, and total earnings of $218. Log only the $210 and the record treats the $40 you handed off as money you kept.

A blank Total Tip-Out counts as $0, so an unanswered prompt looks like you kept every tip.

Not tax advice

TrackMyTips is a personal log. It is not tax software, does not file or prepare returns, and cannot tell you what you owe or must report. For those questions, use the IRS publications above or a qualified tax professional.