The National Directory of Certified Public Accountants

Ask A CPA - Tip Income Reporting

Allocated Tips - Reported On Form W-2, Box 8

The employer reports the allocated tips in Box 8 of the employee's Form W-2; the allocated tips are not included in Box 1 as taxable wages. The employee must include the tip amount in Box 8, as wage income on Form 1040, Line 7 and also enter the amount on Form 4137 to determine the employee's share of the FICA tax liability.

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