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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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my allocated tips section on my W2

Resolved Question:

my "allocated tips" section on my W2 wasn't filled out, can my employer change my w2 so it displays the amount I tipped out to my fellow co-workers? It's a rather large amount..
Submitted: 10 years ago.
Category: Tax
Expert:  Lev replied 10 years ago.

You don't need to change "allocated tips" section. Did you report tips to the employer? Do you have a log of tips that you actually received?


What do you mean under 'tipped out to my fellow co-workers"? Did you voluntary shared tips or there are some rules regarding sharing tips?

Customer: replied 10 years ago.
Reply to Lev's Post: Okay... I'm afraid you don't understand my situation. I am a server and I tip out other ppl I work with, like the busser, the bartender, the foodrunner etc.etc. So last year I tipped out $4700 out of my wages, therefore the W2 needs to be corrected because it doesn't show this amount. This is money that I didn't actually make... I hope I'm making myself clear:) Thanks much.
Expert:  Lev replied 10 years ago.

It is still not clear if tip income is included in the box 1 or 8 on W2 form.


Your employee may report allocated tips on W2 in box 8. However this is not an amount you should report as your income. You should have a daily tip income log - see examples here - http://www.irs.gov/pub/irs-pdf/p1244.pdf that includes tips paid out.


In general tips that were paid out should be reported to your employer using form 4070


You will report to IRS tips that were not reported on form 4137 http://www.irs.gov/pub/irs-pdf/f4137.pdf. Only actual tip amount you receive should be reported. A daily tip income log will be your supporting document.


Your employer should not include in the W2 box 1 tips that were not reported. Those that were reported shall be included.


You may also see IRS publication 531 - http://www.irs.gov/pub/irs-pdf/p531.pdf


Customer: replied 10 years ago.
Reply to Lev's Post: "Your employer should not include in the W2 box 1 tips that were not reported. Those that were reported shall be included"
This is not about tips reported because this is not about tips that I made. It's about tips other ppl received from me every shift I worked. For example, if I make $100 and it's all on credit cards, the computer at work won't let me declare anything less, even though out of that $100 I have to tip out my bartender 1% of my sales, and my busser 2%. Computer is not set up for me to enter those amounts, therefore 9 out of 10 I end up walking with less than I declare.
So again...that is money i have to declare and pay taxes on, but it's money I DON'T HAVE, money I didn't leave work with.
Question is does my employer have the legal right to tell me they won't change my W2 after knowing all this? I'm talking about $4700 that I paid taxes on last year even though that $4700 is all money other ppl received from me.
Expert:  Lev replied 10 years ago.

You is not responsible to pay taxes for income you didn't received, however you are responsible to report tip income to employer using the form 4070 - see lellow




In this form you may include amount you tipped out. If you didn't report this, your employer doesn't have any information about amount you tiped out and sent information on w2 to you and to IRS based on information it had.


Try to report it now even it seems too late. Attached a letter with full description and amounts you received and tipped out. Be sure you have all supporting documents as daily tips log - see below



If this doesn't work make a copy of daily log, write the explanation letter to IRS and attach to your return. State in the letter that tipping out is the usual way of doing the business in the company you work for and that the company didn't instruct you how to report tipped out amounts and refused to correct W2. Your return with all papers should me mailed to IRS.


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