Questions & Answers

Can I report actual tips as income on my tax return instead of allocated tips from Box 8 of my W-2?

Taxpayers must report allocated tips as income on their tax return unless either of the following exceptions applies:

The taxpayer kept a daily tip record, or other evidence that is as credible and as reliable as a daily tip record, as required under rules explained earlier.

The taxpayer's tip record is incomplete, but it shows that the actual tips were more than the sum of the tips reported to the employer plus the allocated tips.

If either exception applies, report actual tips on the return. Do not report the allocated tips.

You can find more detail about allocated tips here.

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