Community Chat

[granddi]

We were eating at a chain restaurant called Salt Grass and our group was discussing tipping. So I asked the server a question that was discussed.

We asked her: Do you get the full amount of your tip that we put on the credit card slip? This is what she said.

Wow, I am so glad you asked me that.We wish more people understood this.  The short answer is yes but.......they do not get the tip in cash. The amount of the tip on the credit card is subject to the usual withholding/taxes. So if you leave 20% by credit card the server get that amount less the taxes vs the full amount if you leave cash. She said we are not ever permitted to ask customers for cash vs leave on credit.

I recently paid  Toni and Guy Salon by cc and they asked about tip. When I said $10.00 they ran my card and handed me the $10 and the envelope for the stylist. Must be the same issue of withholding taxes

[kaydee50]

I was told long ago that servers prefer the tip in cash which I try to do as often as I can.

[henderson]

I thought all tips, cash or credit card are subject to the server reporting them when they file their taxes.  This sounds like when someone is being "paid under the table" as they receive cash and they don't report it.  If I'm wrong, would someone please set me straight.

[GCR18]

I have never given it much thought, but have friends that charge the meal and leave cash for the tip.  I usually pay and tip in cash.

[TheMemphisVette]

tips are taxable income.  people do not report it and think that is ok.

neither do people pay the state sales tax themselves if sellers do not collect it.    they actually think they do not have to.

[StylishLady]

Tips should be considered as a gift---tax free.

[Carmie]

Tips are considered income and are subject to taxes, even if they are given in cash form.

Often a tip is figured in by the resturant for tax purposes weather one was left or not. For example, 15% might be added to their actual wages on paper  to cover the tips that they were expected to receive.  Their W2 will have the 15% extra added on even though some people leave more and some less. It’s supposed to average out.

[Bri36]

I don't think tips should be taxed either.

I try to tip in cash when I can.  

[JeanLouiseFinch]

Tips are income, thus taxable, though I think probably the majority of people in service jobs where tipping is done in cash don't claim it.  It's dishonest but people do it.  When the tipping is done on a credit card, the owner of the establishment is obligated to report it and take the required withholding out because he/she has to send that into the fed and state.

[henderson]

I googled this:  If you receive cash tips in the course of your job, the IRS requires you to report them, whether you receive the tips from a customer, from another employee, your employer or from a tip pool. Servers who receive tips as part of their job are supposed to report the total to their employers and to the IRS on their annual income tax returns.