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curious
ANSWERS: 1
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Allocated tips, line 8, are tips that your employer has assigned to you in addition to the tips you reported (social security tips, line 7). The allocated tips to you are your share of an amount figured by subtracting the reported tips of all employees from 8% (or an approved lower reate) of food and drink sales. AND the bad news is that you now must pay all of your own Social Security and Medicare taxes on allocated tips (vs reported tips you pay 1/2 and the employer pays 1/2). And these tips get added to income, box 1, on Line 7 of form 1040. You must report these on your tax return unless you kept a daily tip record or if your actual tips were more than the tips you reported plus the allocated tips. then you report the actual tips!
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