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IRS.gov Website
Publication 17
taxmap/pub17/p17-030.htm#en_us_publink1000171391

Allocated Tips(p54)

rule
If your employer allocated tips to you, they are shown separately in box 8 of your Form W-2. They are not included in box 1 with your wages and reported tips. If box 8 is blank, this discussion does not apply to you.
taxmap/pub17/p17-030.htm#en_us_publink1000171392

What are allocated tips.(p54)

rule
These are tips that your employer assigned to you in addition to the tips you reported to your employer for the year. Your employer will have done this only if: No income, social security, or Medicare taxes are withheld on allocated tips.
taxmap/pub17/p17-030.htm#en_us_publink1000171393

How were your allocated tips figured.(p54)

rule
The tips allocated to you are your share of an amount figured by subtracting the reported tips of all employees from 8% (or an approved lower rate) of food and drink sales (other than carryout sales and sales with a service charge of 10% or more). Your share of that amount was figured using either a method provided by an employer-employee agreement or a method provided by IRS regulations based on employees' sales or hours worked. For information about the exact allocation method used, ask your employer.
taxmap/pub17/p17-030.htm#en_us_publink1000171394

Must you report your allocated tips on your return.(p55)

rule
You must report allocated tips on your tax return unless either of the following exceptions applies. If either exception applies, report your actual tips on your return. Do not report the allocated tips. See What tips to report under Reporting Tips on Your Tax Return, earlier.
taxmap/pub17/p17-030.htm#en_us_publink1000171396

How to report allocated tips.(p55)

rule
If you do not meet either of the exceptions above, report the total of box 1 and box 8 of your Forms(s) W-2 as wages on Form 1040, line 7. (You cannot file Form 1040A or Form 1040EZ.)
Because social security and Medicare taxes were not withheld from the allocated tips, you must report those taxes as additional tax on your return. Complete Form 4137, and include the allocated tips on line 1 of the form. See Reporting social security and Medicare taxes on tips not reported to your employer under Reporting Tips on Your Tax Return, earlier.