Question by sportman16977: What are allocated tips? Are they bad?
Best answer:
Answer by Edward G
No, they are not bad. They are one way to determine how much Federal income tax you owe on the tips you receive.
This is explained as follows at the link, below:
“All tips you receive are taxable and must be reported on your tax return. Certain employers must allocate tips if the percentage of tips reported by employees falls below a required minimum percentage of gross sales. To “allocate tips” means to assign an additional amount as tips to each employee for tax purposes whose reported tips are below the required percentage. These allocated tips will be shown in Box 8 of your Form W-2.”
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What are allocated tips? Are they bad?
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