Tips are considered part of your compensation for work that you perform. Because of this, your employer is required to withhold social security tax on your tips as well as your base wage. The good news is that this increases your credits with the social security system for disability or retirement benefits.
However, if you are subject to "tip-outs" or tip sharing, where some of your tips are shared with other staff, when you report tips to your employer, you should only report the tips you got to keep, and not the entire amount. If you reported too much tips in the past, this is fairly difficult to fix, but going forward, you should only report the tips you keep.
