An amount or percentage of a server's tips that the server shares, either voluntarily or as mandated in a tip sharing or tip pooling agreement, with other employees such as bussers, bartenders, back waiters and host/hostesses whose job duties indirectly assist the server.
For a person who receives tips in the course of their work, to provide a percentage of tips to certain co-workers who support the work done by the waiter.
It was my first day on the job, so when I tipped out the bus boy but didn't tip out the bartender, my shift supervisor let me know that bartenders should be tipped out too, and to make sure that my tip outs were at least 5% of my day's total tips.
"You cannot deduct tip-outs (the tips you split with other employees) on your tax return. Nor can you deduct them from your allocated tips. The practice of tipping-out is one of the reasons you should keep a detailed daily log of your tips. If you documented that you tip-out, and you reported all your tips to your employer, then you do not include in your income the allocated tips in box 8 of Form W-2." [extract from U.S. Internal Revenue Service Bulletin 4.12 Interest/Dividends/Other Types of Income]