It says to just claim what we actually made but what if my tips on my W-2 don't reflect my tip outs just what I had before I tipped out? Can I replace my tips on my W-2?

[a006r]

Am I able to sill subtract my tip outs from my reported tips that my employer put on my W-2? 

[ToddL]

Yes, you can replace (or adjust) the tips reported on your  W-2, but make sure you have a good reason (e.g. records) for the amount of the adjustment.

Unfortunately, if your employer reports your gross tips to the IRS on Form W-2, i.e. what you received before "tipping out", you won't be able to easily deduct them from your taxable income. You would have to keep good records of your tips received and tips paid out, and may still have to explain the difference to the IRS later in the year.

The following post explains what you need to do to correct this error.

Unfortunately, many employers do not handle tips correctly because they report tips gross of tip-outs, which is incorrect. Consequently, the first question should be, are the tip outs reported in income. They shouldn't be, as you should report your tips net of tip-outs so they are not on your Form W-2. If you report your tips to your employer NET of tip outs, they are not included in income, and you cannot deduct them.

IRS Publication 517 suggests "If you participate in a tip-splitting or tip-pooling arrangement, report only the tips you receive and retain. Do not report to your employer any portion of the tips you receive that you pass on to other employees."  See also https://www.irs.gov/help-resources/tools-faqs/faqs-for-individuals/frequently-asked-tax-questions-an...

The IRS URL suggests "You must report all tips you received (including both cash and noncash tips) on your tax return. Even if box 8 of your Form W-2 contains an amount for allocated tips, you are not required to report allocated tip income if you did not receive it. But you must be able to prove the amount of tips you actually received with adequate records. If you do not have records or have inadequate records, you must report the amount in box 8 as income on your tax return. You cannot deduct any amounts you tipped-out to other employees from the amount shown in box 8."

As I read that, if you have an adequate record of your tips, you would report the Box 8 amount equal to the tips you received, which may not be the amount on your Form W-2.

Future advice:  report your tips to your employer "net" of tip outs and keep an accurate record of tips earned

[Mhinds123]

I have a question about deducting the tipouts from my w2s...as my last employer would not let us claim our own tips and we were not given access to do so either....when I would ask him what if i made less than what it makes me claim he said it always evens itself out ....but it absolutely never did....i started keeping a daily report that i handed in with everything that i tipped out and to whom....as long as i have all that can i change it to what i actually earned for the year

[DianeW777]

Yes. The IRS does not require you to report more than you actually earned in tips.  As @ToddL indicated you must keep an accurate and detailed record of your tips as your proof.  As long as you are satisfied your records are in order then you can make the change and keep all information with your tax record for future use when and if the IRS requests it.

• IRS FAQ - Allocated Tips

@Mhinds123

[Khalisse1]

Where do I claim what I actually made?  I kept records for 6 months last year of who I tipped out to at the end of my shift. It was anywhere from $15 to $50.  

[ErnieS0]

TurboTax will ask you about your actual tips after you enter a W-2.

1. On the screen “Let's check for uncommon situations,” select Unreported tips, then Continue
2. Fill out the information on the screen “Now let's enter your unreported tips.”
3. Enter tips you paid out under Total tips that you paid out through tip-sharing

[iemak]

From what I was told from an Intuit employee is that you can only report payout income you receive from other employees not payout expenses you give out.  Is that double dipping by the IRS or what?  

This is what they sent me from the IRS

"If you participate in a tip-splitting or tip-pooling arrangement, report only the tips you receive and retain. Don't report on your income tax return any portion of the tips you receive that you pass on to other employees. However, you must report tips you receive from other employees."

Anyone clear on this???

[PatriciaV]

The correct interpretation of the quote you provided is that you must report all the tips you receive, including any given to you by other employees. But you do not report any tips you give other employees. There is no double-taxation if the tips are reported correctly. 

If you need to adjust the tips reported on your W-2, check the box for "unreported tips" on the page "Let's check for uncommon situations." On the next page, you can report both the tips you received from other employees AND the tips you paid out.

@iemak 

[fanfare]

"On the next page, you can report both the tips you received from other employees AND the tips you paid out."

This is NO HELP, because it does not adjust tips on the W-2.

@PatriciaV 

[Hal_Al]

Also see:

https://ttlc.intuit.com/questions/2828634-my-wife-is-a-waitress-and-paid-1300-in-tip-out-for-the-yea...

https://ttlc.intuit.com/questions/4778470-employers-taxing-full-tips

https://www.irs.gov/faqs/interest-dividends-other-types-of-income/tips/tips