Reporting Pooled Tips on Taxes: A Step-by-Step Guide
Tax Content Lead · 9/3/2026
Key takeaways
- To report pooled tips, report tips exceeding $20 per month per employer on Form W-2, Box 14b, and use Form 4137 to report unreported tip income by April 15th.
- Tips under $20 per month per employer are not reportable, but tips of $20+ per month per employer must be reported to the employer and reported on Form W-2, Box 14b.
- If you received unreported tip income, you must report it on Form 4137, while large food and beverage establishments with $20,000+ in tips must use Form 8027 to report their tip income.
- The deadline for reporting unreported tip income on Form 4137 is April 15th of each year.
Reporting Pooled Tips on Your Tax Return
To report pooled tips on your tax return, you need to report tips exceeding $20 per month per employer on Form W-2, Box 14b. This is in addition to using Form 4137 to report unreported tip income by the April 15th deadline. The IRS requires employers to report tips received by employees in excess of $20 per month per employer on Form W-2, Box 14b, and provide employees with a written statement of their annual tips by January 31st of each year. If your employer is not reporting your tips correctly, you may want to review the IRS instructions for Form W-2, available at https://www.irs.gov/forms-pubs/about-form-w-2. As a server, I’ve seen firsthand the importance of accurately reporting tips. One practical tip is to keep a record of your tips throughout the year, including the date, amount, and employer. This will make it easier to report your tips correctly on your tax return.
To illustrate this, let's consider an example. Suppose a server, John, received $1,500 in tips from a restaurant in a given month. If his tips exceeded $20 per month per employer, the employer must report these tips on Form W-2, Box 14b, and John must report them on his tax return using Form 4137.
What is the Pooled Tips Reporting Threshold?
According to the IRS, tips under $20 per month per employer are not reportable, but tips of $20+ per month per employer must be reported to the employer and reported on Form W-2, Box 14b. This is stated in the IRS instructions for Form W-2, available at https://www.irs.gov/forms-pubs/about-form-w-2.
Form 8027 is used by large food and beverage establishments with $20,000+ in tips to report their tip income. However, this form is not used by individual employees to report their tips.
Comparing Pooled Tips Reporting Options
If you received unreported tip income, you must report it on Form 4137. On the other hand, if you are a large food and beverage establishment with $20,000+ in tips, you must use Form 8027 to report your tip income. If you are unsure about how to report pooled tips, it is recommended that you consult with a tax professional.
The Treasury Department's Treasury Tipped Occupation Codes (TTOC) are used to identify tipped employees and report pooled tips. You can verify TTOC codes with the IRS or a tax professional.
Tipped Occupation Codes (TTOC) and Pooled Tips
To report TTOC on Form W-2, Box 14b, you need to provide the correct TTOC code for your occupation. You can find the correct TTOC code in the IRS instructions for Form W-2, available at https://www.irs.gov/forms-pubs/about-form-w-2.
Here is a list of Tipped Occupation Codes (TTOC) for common tipped occupations:
- S - Servers and bartenders
- H - Hairdressers and cosmetologists
- D - Drivers and delivery personnel
- T - Taxi drivers
- B - Bartenders
Frequently Asked Questions (FAQs)
What is the deadline for reporting unreported tip income on Form 4137?
The deadline for reporting unreported tip income on Form 4137 is April 15th of each year.
What is the threshold for reporting tips on Form W-2, Box 14b?
Tips exceeding $20 per month per employer must be reported on Form W-2, Box 14b.
What is Form 8027 used for?
Form 8027 is used by large food and beverage establishments with $20,000+ in tips to report their tip income.
How do I verify TTOC codes?
You can verify TTOC codes with the IRS or a tax professional.