Tips, regardless of amount, are taxable income. They should be included as such on your tax return. You also have certain reporting obligations. If the amount of tips for the month exceeds $20, you are supposed to report this amount to your employer by the 10th day of the following month (e.g., report June tips of $56 to your employer by July 10). This reporting is necessary for purposes Social Security and Medicare taxes. You do this reporting to your employer on Form 4070, Employee’s Report of Tips to Employer. In order to make this report accurately, you should keep a daily record of your tips; you can use Form 4070A, Employee’s Daily Record of Tips, for this purpose. Alternatively, your employer may provide an electronic system for tracking your tips, and you can use this method instead of a paper record.