My employer included allocated tips on my W-2. However, the allocated tips were actually higher than what I received. Do I have to pay taxes on this amount?
Sometimes, employers assign additional amounts as tips to an employee whose reported tips are below a set percentage; taxes must be paid on allocated tips. However, if you have records showing that the allocated tips are incorrect, you should report only the amount of tips you made, and enter the correct amount of tips on Form 4137, and line 57 of your Form 1040.