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Started By
Message
Taxation of TIPS
Posted on 10/27/22 at 2:53 pm
Posted on 10/27/22 at 2:53 pm
Can anyone give me some insight on how the IRS handles estimates of cash tips?
I know of servers in restaurants who have been audited and the IRS made an assumption of how much they were tipped in total.
What about other jobs like barbers or valet parking attendants?
I presume they get a large percentage of their income from TIPS.
I know of servers in restaurants who have been audited and the IRS made an assumption of how much they were tipped in total.
What about other jobs like barbers or valet parking attendants?
I presume they get a large percentage of their income from TIPS.
10
Posted on 10/27/22 at 4:57 pm to InCaliForNow
Tips should not be taxed.
Immoral and unethical.
Immoral and unethical.
Posted on 10/27/22 at 6:26 pm to InCaliForNow
Down voted for poor title.
TIPS are Treasury Inflation Protected Securities.
Gratuities are simply tips.
TIPS are Treasury Inflation Protected Securities.
Gratuities are simply tips.
Posted on 10/27/22 at 6:34 pm to BamaCoaster
Why should tips be any different than wage based income?
Passing the obligation to pay employees off to customers is what I find questionable. I've never understood why some businesses can avoid paying minimum wage that way. I much prefer the European approach where I know wait staff is paid already and my tip is an appreciated bonus.
Now what I find unjust is the preferential taxation of capital gains versus wage based income. Not only does employer and employee pay combined 15% FICA, then wages are taxed at a higher rate than long term gains. How is invested capital more sheltered from taxation than actual individual labor and expenditure of a portion of their lives?
Passing the obligation to pay employees off to customers is what I find questionable. I've never understood why some businesses can avoid paying minimum wage that way. I much prefer the European approach where I know wait staff is paid already and my tip is an appreciated bonus.
Now what I find unjust is the preferential taxation of capital gains versus wage based income. Not only does employer and employee pay combined 15% FICA, then wages are taxed at a higher rate than long term gains. How is invested capital more sheltered from taxation than actual individual labor and expenditure of a portion of their lives?
This post was edited on 10/27/22 at 6:59 pm
Posted on 10/27/22 at 9:34 pm to InCaliForNow
If the IRS is coming for servers and valets to get an extra 2k in tax revenue then our system is doomed
Posted on 10/27/22 at 9:57 pm to TorchtheFlyingTiger
Habit
I’m actually a fixed income analyst
I’m actually a fixed income analyst
Posted on 10/27/22 at 10:18 pm to InCaliForNow
Sure you are. 
Trying to impress the strippers with tax advice is a losing tactic.
The only reason they're talking to you is just the tips (and maybe access to drugs.)
Trying to impress the strippers with tax advice is a losing tactic.
The only reason they're talking to you is just the tips (and maybe access to drugs.)
This post was edited on 10/27/22 at 10:19 pm
Posted on 10/27/22 at 10:32 pm to InCaliForNow
Essentially they try to take information that is available to them, and compute average tip rates based on that info.
For example, they can look at credit card receipts where tips were charged, and come up with average rates based on the amount of the bill, booze vs food, time of day / weekend, etc.
Barbers, again they will look at certain cash inflows and outflows and averages and come up with rates.
Parking lot attendants it's harder.
For example, they can look at credit card receipts where tips were charged, and come up with average rates based on the amount of the bill, booze vs food, time of day / weekend, etc.
Barbers, again they will look at certain cash inflows and outflows and averages and come up with rates.
Parking lot attendants it's harder.
Posted on 10/28/22 at 9:05 am to InCaliForNow
Look at IRS Pub. 531.
Posted on 10/28/22 at 10:52 am to BamaCoaster
quote:Not reporting your cash income to avoid taxes on it is immoral and unethical.
Tips should not be taxed.
Immoral and unethical.
A ton of service industry employees make a significant portion (if not a majority) of their income. Why should they not be taxed on it? Restaurant servers, bartenders, valets, food delivery drivers, street performers, nail salons, hair stylists...all make a big chunk of their income off tips.
If people in those fields are under reporting their tips, not only are they avoiding paying the taxes on it but they're probably qualifying for things like medicaid, section 8, or food stamps that they wouldn't have qualified for if they were reporting their income accurately.
This post was edited on 10/28/22 at 10:55 am
Posted on 10/29/22 at 11:38 pm to Tiger Prawn
Taxation of income is immoral. The only taxation power given to the federal government in the Constitution was tariffs. I have no issue with anyone screwing the Feds as much as they can get away with.
This post was edited on 10/29/22 at 11:39 pm
Posted on 10/30/22 at 9:31 am to Tiger Prawn
quote:
If people in those fields are under reporting their tips, not only are they avoiding paying the taxes on it but they're probably qualifying for things like medicaid, section 8, or food stamps that they wouldn't have qualified for if they were reporting their income accurately.
This. Another example of why our tipping culture is out of control.
Posted on 10/30/22 at 1:18 pm to Tiger Prawn
quote:
Not reporting your cash income to avoid taxes on it is immoral and unethical.
LOL
O
L
Posted on 10/30/22 at 5:28 pm to Drizzt
quote:
Taxation of income is immoral.
Referring to it as a moral issue may be a tad over the top.
It’s less provocative, but probably more agreeable to say that productivity taxes are more likely to suppress economic growth potential than consumption taxes. If you want to sex that up a little, take a shot.
Posted on 10/31/22 at 8:25 am to Drizzt
quote:
I have no issue with anyone screwing the Feds as much as they can get away with.
Except they aren't screwing the Feds. They are screwing all the other tax payers.
Posted on 10/31/22 at 9:21 am to InCaliForNow
Dang bro I thought you meant tips like treasury inflation protected securities and I was gonna make a joke about working in a restaurant
Posted on 10/31/22 at 12:28 pm to Willie Stroker
quote:
Taxation of income is immoral.
I would say taxation of income is ludicrous.
All tax should be consumption based.
Income is hard to track for pimps, drug dealers, etc.
Point of sale tax allows the freedom to decide what is worth paying tax for.
Posted on 10/31/22 at 1:53 pm to TorchtheFlyingTiger
quote:
Now what I find unjust is the preferential taxation of capital gains versus wage based income. Not only does employer and employee pay combined 15% FICA, then wages are taxed at a higher rate than long term gains.
Taxes should be more fair. If you earn your income via capital gains and I earn mine through wages then I shouldn't be punished. It is ridiculous. We need to just have a simple tax code.
Posted on 10/31/22 at 2:36 pm to InCaliForNow
When I worked for a corporate restaurant chain, they made us report them in the system every night. Most tips were by credit card and were already in the system. Cash tips were probably 20% or so of all tips. Maybe less. That was 25 years ago. I'd imagine even less tips are cash these days.
I will not speak about the year I roleplayed Caddyshack and all tips were cash.
I will not speak about the year I roleplayed Caddyshack and all tips were cash.
Posted on 10/31/22 at 3:40 pm to BamaCoaster
LOL, immoral and unethical?
I guess no form of compensation should be taxable, based on that profound statement.
I guess no form of compensation should be taxable, based on that profound statement.
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