Tip Reporting Threshold Checker
Plug in your cash and card tips for the month. This checker tells you whether you've crossed the IRS $20 threshold and when your report is due.
Cash Tips This Month
Credit/Debit Card Tips This Month
Tip-Out Paid to Others
Tips shared with bussers, barbacks, hosts, etc.
Month of Tips
Number of Tipped Jobs
The $20 threshold applies per employer, per month.
Tip Breakdown
Reporting Details
Stop Guessing, Start Tracking
Server44 logs your tips as you go, watches the $20 threshold for you, and sends a reminder before your report is due.
How the IRS $20 tip reporting threshold works
IRC Section 6053(a) sets the rule: if you receive $20 or more in tips from a single employer in any calendar month, you have to report those tips in writing by the 10th of the following month. The threshold is per employer, per month. It does not add up across jobs or roll over between months.
Cash tips and credit/debit card tips both count toward the $20 line. Non-cash tips like tickets, passes, or merchandise? Those never count toward the threshold and you never report them to your employer. They are still taxable income on your federal return, though.
If your total tips from one employer stay under $20 for the month, you can skip the employer report. But that does not mean the income is tax-free. All tip income, regardless of amount, still goes on your Form 1040.
What you report vs. what your employer reports
Your job is simple: give your employer a written report of your total tips by the 10th of the next month. Include cash tips, card tips paid to you, and your share of any tip pool. Leave out tips you paid to other employees (tip-outs).
Once you hand in that report, your employer handles the rest: withholding income tax, Social Security, and Medicare on those tips, then including everything on your W-2. Your employer can already see card tips through their payment processor, but you still need to file a written report once your total hits $20.
Monthly tip reporting quick reference
| Cash Tips | Card Tips | Tip-Out | Net Tips | Must Report? |
|---|---|---|---|---|
| $10 | $0 | $0 | $10 | No |
| $15 | $5 | $0 | $20 | Yes (exactly $20) |
| $25 | $0 | $0 | $25 | Yes |
| $0 | $50 | $0 | $50 | Yes |
| $100 | $200 | $50 | $250 | Yes |
| $30 | $0 | $15 | $15 | No |
| $50 | $100 | $135 | $15 | No |
| $500 | $1,000 | $300 | $1,200 | Yes |
| $19.99 | $0 | $0 | $19.99 | No |
2026 tip report due dates
| Tips Earned In | Report Due By | Day of Week |
|---|---|---|
| January 2026 | February 10, 2026 | Tuesday |
| February 2026 | March 10, 2026 | Tuesday |
| March 2026 | April 10, 2026 | Friday |
| April 2026 | May 11, 2026 | Monday (10th is Sunday) |
| May 2026 | June 10, 2026 | Wednesday |
| June 2026 | July 10, 2026 | Friday |
| July 2026 | August 10, 2026 | Monday |
| August 2026 | September 10, 2026 | Thursday |
| September 2026 | October 12, 2026 | Monday (10th is Saturday) |
| October 2026 | November 10, 2026 | Tuesday |
| November 2026 | December 10, 2026 | Thursday |
| December 2026 | January 11, 2027 | Monday (10th is Sunday) |
The No Tax on Tips deduction (2025-2028)
For tax years 2025 through 2028, qualifying tipped workers can deduct up to $25,000 of tip income from federal income tax under the No Tax on Tips Act (P.L. 119-21, Sec. 70201). The deduction phases out for single filers with modified AGI above $150,000 ($300,000 for married filing jointly).
Voluntary cash tips from customers qualify, including credit and debit card tips. Service charges and automatic gratuities do not. Starting in 2026, only tips that are separately broken out on your W-2, 1099, or Form 4137 count toward the deduction.
One catch: FICA taxes (Social Security and Medicare) still apply to all tip income, deduction or not. Use our No Tax on Tips Savings Calculator to see how much you'd actually save.
Common tip reporting mistakes
- Forgetting card tips count. Card tips count toward the $20 threshold even though your employer can already see them in their payment records.
- Skipping the tip-out subtraction. Only tips you actually keep count. Subtract anything you paid to bussers, barbacks, or hosts before you check the threshold.
- Thinking under-$20 means tax-free. No employer report is required, but the IRS still taxes the income. It goes on your 1040.
- Mixing up service charges and tips. Mandatory gratuities that your employer sets are wages, not tips. They do not count toward the $20 line.
- Missing the deadline. Your written tip report is due by the 10th of the next month. Miss it and your employer cannot withhold taxes correctly.
- No daily records. The IRS recommends a daily tip log. A tracking app takes the effort out of it.
Frequently Asked Questions
Quick answers on the $20 threshold, deadlines, and what counts
Do I have to report tips under $20 to my employer?
No. If your total tips from one employer are under $20 for the month, you don't have to report them to that employer. The income is still taxable, though. You need to include all tip income on your federal tax return (Form 1040), regardless of amount. If you owe Social Security and Medicare tax on unreported tips, use Form 4137 to calculate it.
What is the $20 tip reporting threshold?
It comes from IRC Section 6053(a). If you receive $20 or more in tips from a single employer during a calendar month, you must give your employer a written report of the total by the 10th of the next month. The $20 line is per employer, per month. Tips from different jobs or different months don't get added together.
Do credit card tips count toward the $20 threshold?
Yes. Card tips, debit tips, and tips from any electronic payment all count. Your employer can already see card tips in their payment processing records, but that doesn't let you off the hook. You still need to file a written tip report once your monthly total (cash + card + tip pool share) hits $20.
When is my tip report due to my employer?
By the 10th of the month after the month you earned the tips. January tips? Due by February 10. If the 10th lands on a weekend or federal holiday, the deadline moves to the next business day.
What is the difference between tips and service charges?
Tips are voluntary. The customer decides whether and how much to leave. Service charges (like auto-gratuities on large party bills) are set by the employer and count as regular wages under IRS rules. They show up in your paycheck and W-2 wages, and they do not count toward the $20 tip reporting threshold.
What happens if I don't report my tips?
Your employer can't withhold taxes on tips they don't know about. You'll owe the income tax, Social Security, and Medicare when you file, and the IRS can tack on a penalty of 50% of the Social Security and Medicare tax you should have paid (IRC Section 6652(b)). Unreported tips also lower your Social Security earnings record, which can reduce your benefits down the road.
Do I subtract tip-outs before checking the $20 threshold?
Yes. Only tips you actually keep count. If you received $50 but tipped out $35 to bussers, barbacks, and hosts, your reportable amount is $15, which is below the threshold. Always use the net amount after tip-sharing when checking whether you've hit $20.
Can I still deduct tips under the No Tax on Tips law?
For 2025 through 2028, yes. You can deduct up to $25,000 of qualifying tip income from federal income tax under Section 224. The deduction phases out above $150,000 modified AGI for single filers ($300,000 for joint). FICA taxes still apply to every dollar of tip income, though. And starting in 2026, only tips that are separately broken out on your W-2, 1099, or Form 4137 qualify.