Tips are taxable income. Aplauso's digital tip records make compliance straightforward for employees and employers - replacing the honor-system cash tip reporting that most hospitality businesses previously relied on.

Disclaimer: This article provides general educational information. For advice specific to your situation, consult a qualified tax professional or CPA.

For Employees - Are Tips Taxable?

Yes. The IRS (and equivalents in other countries) considers all tips - including digital tips received through Aplauso - to be taxable income. This has always been true of cash tips too; digital tipping just makes it easier to track accurately.

What Aplauso Records

Every tip you receive through Aplauso is recorded with:

  • Date and time
  • Tip amount (gross)
  • Payment processing fee deducted
  • Net amount to your wallet
  • Payer session ID (anonymous)

This creates an audit-ready record of your tip income.

Form 1099-K from Stripe

If your total Stripe payouts exceed IRS threshold amounts in a calendar year, Stripe will issue you a Form 1099-K. The current thresholds are subject to IRS updates, but as of 2025:

  • Stripe issues a 1099-K if you receive more than $600 in total electronic payments in a calendar year

You'll receive your 1099-K from Stripe (not Aplauso) by January 31 of the following year, via email and in your Stripe Connected account dashboard.

Employee Tip Reporting Obligations (US)

Under IRS rules, employees who receive tips must:

  1. Keep a daily tip record - Aplauso automatically does this for all digital tips.
  2. Report all tips monthly to your employer - using Form 4070 (Employee's Report of Tips to Employer) or an equivalent written statement, if your total tips exceed $20 in a month.
  3. Include tips in your annual income tax return - on Form W-2 (Box 7 for Social Security tip income). Your employer reports tips they're aware of on your W-2.

Employer Obligations (Venue Managers)

Venues that employ tipped workers have the following obligations:

Tip Reporting

Under the FICA Tip Credit (IRS Form 8846), employers can receive a tax credit equal to the employer's share of FICA taxes on tips that exceed the federal minimum wage. This credit is only available when tips are accurately reported - and Aplauso's records make this possible.

Form 8027

Large food and beverage establishments (10+ employees, food/drink sales) must file Form 8027 annually, reporting allocated tips. Your Aplauso analytics export provides the data you need for this form.

W-2 Reporting

Employers must include reported tip income on employees' W-2 forms (Box 7 and Box 8). The tip data from Aplauso can be exported and provided to your payroll provider.

Exporting Tip Data for Payroll and Tax Purposes

Aplauso provides full data exports for tax/payroll use:

  1. Go to Manage → Reports → Tip Income Report.
  2. Select the date range (monthly, quarterly, or annual).
  3. Choose the format: CSV or PDF.
  4. The report includes: employee name, total tips received, processing fees, net payout, and period totals.

For payroll integration, see Connecting Aplauso to your payroll system.

Does Aplauso Report Tips to the IRS?

Aplauso itself does not issue tax forms. Stripe issues 1099-K forms to individual employees when thresholds are met. The venue is responsible for employer-side reporting (W-2, Form 8027 where applicable).

International Tax Considerations

For venues and employees outside the US:

  • Tips are generally treated as income in all major jurisdictions
  • Stripe issues local-equivalent tax forms where required by law
  • UK employees should declare tip income on their Self Assessment; employers may need to include it in RTI (Real Time Information) payroll submissions
  • EU/EEA rules vary by country - consult local tax guidance

Next Steps