Servers and their income tax reporting

In a previous post titled Dinner Tipping Etiquitte, several mentioned the server is taxed on a minimum of 15% of gross receipts. This is not true. The server is taxed on 8% of gross receipts and can fill out paperwork if they can document less than 8% in tips. Here is the specific IRS rule.

The minimum aggregate amount the employer is required to report as tip income of employees generally is 8% of food and beverage receipts. If the aggregate amount of tips reported for any payroll period or calendar year is less than 8%, employers who qualify as large establishments must allocate the difference among tipped employees on either a ';good faith'; agreement, or on the allocation methods prescribed in Sec. 6053.3. See Exhibit 1 for an example illustrating the allocation of tip income.

About 15 years ago, the hospitality industry made a somewhat successful push to move standard tipping practice from 15% to 20%. How many of you are going to jump right on board when they decide they should receive 25% as a standard tip?

Servers and their income tax reporting

Not always MrVegas. In my job as a server I receive 99 percent of my tips on credit cards and am taxed on that payroll as I am on all my other payrolls and jobs, at around 37.5 - 40 % of my income. All establishments are run differently, I am in a union and work for a large corporation and this is how it is done there.

Thanks as always to people who ask questions and try to do the right thing. Please always ask your server for an honest rendering of what they would do in your situation and you will receive it, and if someone is scamming you, you will be able to tell usually. If you feel someone is being dishonest with you about the customs and situations, find a manager.

Servers and their income tax reporting

it all depends, not all businesses use the same withholding system - no matter how a server is withheld (NOT TAXED) during the year - it all is made right at the end of the CY when the server does his/her individual income tax return. As in most all professions what is WITHHELD is NOT the same as what the final tax liability is.

The server must keep accurate records (just as in all professions) and file tax return.

The TAX at the end of the year is what is important - no matter how withhholding is computed during the year.

30 years ago the IRS started to develop computer programs to snag servers who under reported their tip income. I am sure it is easier these days since everything is entered into a computer and a larger percentage of people pay by credit or debit card.

Back in late 70%26#39;s one of the waitresses I worked with got nailed by the IRS for allegedly under reporting her tip income. With penalty and interest in 1980 she owed $5000.00. Problem was she sucked as a server. And was probably the worse server in the place. She was going to pay it because the govt is right rather than fight it. Back then you good buy a new car for $5k. We are sent signed sworn affidavits to the IRS stating she was a really nice but not really good server and didnt make the tips the average server did. If she was a D cup it would helped but her A %26#39;s also hurt her.

I start with a 25% tip in restaurants. And I know when a mistake is the servers fault rather than another part of the house.

Also remember if something is wrong complain right then and there. Dont wait and especially dont wait until the meal is over.

But dont expect a comp just because you didnt like the color of the salad dressing.

Cool - that clears that up I only need to tip 8% to server. Only Kidding :-P

Here is an article that gives you an idea of how they figure out tip income in Vegas. There was a compact between the hotels, unions and the IRS to come up with formulas to help servers avoid having to calulate the info on their own and avoid audits.

lasvegassun.com/sunbin/鈥?/a>

To answer Dr. V%26#39;s ?, the day the hospitality industry tries to shove a 25% standard tip down my throat is the day I start lobbying my congressman to increase the minimum wage for servers. Enough is enough!

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