How can I report tips and gratuities which most people receive as cash?

There are two scenarios in which employees receive tips or gratuities.

In the first scenario, employees are paid directly by customers; this is the most common way. Employees must track all the tips or gratuities received through the year (Jan. 1 to Dec. 31) and keep a copy of tracking documents. When filing the tax return, employees must calculate the total amount and report the amount on Line 10400 as other employment income.

In the second scenario, tips and gratuities are controlled by the employer. In this case, the total amount of tips or gratuities received during the year will be on the T4 slip.