Allocated tips are tips an employer assigns to an employee. They are in addition to the tips the employee reports to the employer. Restaurants, cocktail lounges, and similar businesses are required to assign allocated tips to an employee who reports less tips than his or her share of 8% of the food and drink sales, and who did not participate in the Attributed Tip Income Program (ATIP)
Allocated tips are shown separately in Form W-2, box 8, Allocated Tips. They are not included in the amount in box 1.