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Finance → Taxes → Federal taxes → IRS → IRS - W-2 Forms
ANSWERS: 1
  • Sherri
    Social Security tips, line 7, are tips reported to your employer. Allocated tips, line 8, are tips that your employer has assigned to you in addition to the tips you reported. 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 more bad news: these tips get added to income, box 1, on line l7, form 1040, so there is no withholding done on this additional income.
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