Community Chat

[JeanLouiseFinch]

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@StylishLadywrote:

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

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@StylishLady  Tips aren't gifts.  A gift implies nothing has been received by the giver or done by the recipient who is receiving the tip.  In a tipping situation, the giver is tipping because they received good service from the tip recipient (waitress, hairstylist, cab driver, bell hop, etc).

[Venezia]

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@StylishLadywrote:

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

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I disagree - tips are part of a server's income.  That's why they receive a lower hourly wage than the mandated minimum wage.

If someone mowed your lawn, plowed your driveway, or performed any other of a myriad of self-employed services, would you consider all that income as a gift, too, because you paid in cash?  No, it's payment for services rendered; income.  No different.

Anyone in the serving industry (of any kind) knows that tips are considered income for tax purposes.  Whether they declare it, as they should, is another matter.

[MUNCHIE]

I recently talked to a waitress at a nearby restaurant, she has worked there for years. They started using computers about a year ago. They each enter their own sales,,this is under their social security number. If they receive a 10 per cent tip, they lose money since the total sale is sent in under their ss number and the IRS will tax them on the regular 20 per cent which most people leave. so in other words she is the one who loses..Mostly because she must give 10 per cent to the bar tender, if you order a drink, and also 10 per cent of the tip to the person who cleans the counter. These last two make more money , because of this , than the waitress.

[Shelbelle]

My nail salon has a sign hanging up that says, Please tip in cash.

[OKPrincess]

Interesting. Didn’t know the tip was taxed if left on credit card. DH and I do both.

[cherry]

I think our servers at our local diner must  claim their tips, because they don't seem to have a preference, for how they are tipped

[Venezia]

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@Shelbellewrote:

My nail salon has a sign hanging up that says, Please tip in cash.

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Which tells you that they certainly aren't declaring the tips as income!  I would be asking them why I had to tip in cash, if I was paying with a CC otherwise.  Be interesting to hear their answer.

[Shelbelle]

We always pay in a restaurant with a CC, my DH always leaves the tip on the CC.

[Mominohio]

We have gone to paying only cash for eating out. If we don't have cash, we don't eat out. I hate paying a bill later for something that is already gone.

Even when we did charge, I always left a tip in cash.

Tips are taxable, but here's is how I see it, after working on my feet in the restaurant (fast food during high school and college), and retail industries all my life. I'm going to give over worked and under paid people a cash tip based on the quality of service I've been given by them. If they choose to not claim it, or to not claim all of it, I can live with whatever they decide.

[LexPex]

lovethe desert, I am sure you are correct that the servers probably don't report the cash tips or only some of the $$$.  If you made per hour  what they do, I am sure you would have a better understanding.

DH and I always leave our tips in cash and most of our friends do also since many of us have had daughters/sons etc that were servers at some point...my three children did so both in high school and in college.  They appreciated any tip.