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"If you do not report at least this amount (8% I believe), then the difference will be tacked on to your W-2 as allocated tips."

Many waiters, including myself, used to believe the 8% myth. You can be sure that the IRS expects you to report ALL tip income. They have a nifty thing called The McQuatters Formula which they use to determine what you should have made based on info they get from your restaurant's credit card receipts, etc.

When I worked in the biz many moons ago I got nailed for underreporting (and for believing that blasted 8% Myth!) and after interest and penalties...yipes. Afterwards I reported ALL TIP INCOME and never had another problem.

I wasn't saying the 8% should be some sort of guideline for reporting. The issue is in the expectation on the part of the IRS. In my mind there is a fundamental problem with the tax collector assuming one ought to have made a particular amount of money. I once worked in a chain restaurant (lunch crowd), where the tips averaged 5-10%. This was simply the public's perception of this place, it had nothing to do with level of service. I quit after 2 weeks. I'm afraid the days when waiting tables or tending bar were a good way for a student or "under-educated" person to make a decent living proportionate with their level of effort are long gone (I started waiting tables before they changed the tip laws). I do know there are some server jobs that are careers- I've worked cocktails at places where the servers on the floor earned $200+ on a weeknight. However, there just aren't very many of those jobs.