Form 8027, Employer’s Annual Information Return of Tip Income and Allocated Tips
Form 8027 is the annual return large food and beverage establishments file to report gross receipts, charged tips, and tips reported by employees, and to figure any tip allocation. Fill in the official IRS PDF below and download it.
This is the genuine IRS PDF, unmodified. Source: IRS official page.
What is 8027?
Employers that run a large food or beverage establishment, generally one where tipping is customary and more than ten employees worked on a typical business day, must file Form 8027 each year for each establishment. The return reports gross receipts from food and beverage sales, charge receipts and charged tips, and the total tips employees reported to the employer.
When employees’ reported tips fall below a set percentage of gross receipts, the form computes allocated tips, which the employer must spread among directly tipped employees and report in box 8 of their Forms W-2. Employers with multiple establishments file a separate Form 8027 for each one, with Form 8027-T as a transmittal for paper filers.
Who files 8027?
- Restaurants, bars, and similar establishments where tipping is customary and the ten-employee test is met
- Employers with several locations, who file a separate Form 8027 for each large establishment
- Food and beverage employers whose employees reported tips below the applicable percentage of gross receipts, triggering allocation
- Employers with a lower tip allocation rate approved by the IRS
How to fill out 8027
- Enter the establishment’s name, address, and type, plus your EIN and the establishment number if you operate more than one location.
- Report total charged tips, charge receipts showing charged tips, and total gross receipts from food and beverage operations for the year.
- Enter service charges of less than ten percent that were distributed to employees, and the total tips employees reported to you.
- Compare reported tips with the applicable percentage of gross receipts and, if reported tips fall short, figure the allocated tips using the hours-worked, gross receipts, or good-faith-agreement method.
- Download the completed PDF and file it by the paper deadline, or e-file; allocated tip amounts also go on the affected employees’ Forms W-2.
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Frequently asked questions
Which establishments count as large?
Generally a food or beverage operation where tipping is customary and more than ten employees, counting all employees rather than only tipped staff, worked on a typical business day during the prior year. The instructions include a worksheet for the test.
What are allocated tips?
If the tips employees report add up to less than the applicable percentage of the establishment’s gross receipts, the shortfall is allocated among directly tipped employees and shown in box 8 of their W-2s. Allocation is a reporting mechanism; employees pay tax based on tips they actually received and kept.
Do I file one Form 8027 for my whole company?
No, one per large establishment. Paper filers with multiple establishments attach the returns to a Form 8027-T transmittal, and employers filing many information returns may be required to e-file. Check the current instructions at irs.gov for the e-file threshold.