CashoutGlossary / Tip-out
Tip-out
The share of your tips you pay to support staff such as bussers, runners or bartenders after a shift, often set as a percent of your sales.
A tip-out is money a server or bartender passes to coworkers who helped during the shift: bussers, food runners, service bartenders, sometimes hosts. Houses usually set it as a percent of your sales or a percent of your tips. The percentages are house policy, not law.
The federal tip pooling regulation covers this kind of sharing, and its own example is waiters giving part of their tips to the busser. If your employer takes a tip credit, a required tip-out can go only to employees who customarily and regularly receive tips. Managers and supervisors can't get any of it, and the employer can't keep any. Back of house staff can share only when the employer pays everyone at least the full federal minimum wage in cash.
For taxes, report only the tips you keep. The IRS says not to report to your employer the part you pass on to other employees, and your daily tip record should list what you paid out. The coworkers who receive your tip-out report it as their own tips.
The common mistake is not tracking what a sales-based tip-out costs you. On a percent of sales system you owe the same amount whether your tables tipped well or not. In Cashout you enter the tip-out on each shift, it's subtracted from your net tips, and Insights shows your tip-out ratio.
Related terms
Tip pool · Runner · Reported tips · Tip credit
