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Started By
Message
No tax on tips could be a huge loophole
Posted on 8/12/24 at 9:05 am
Posted on 8/12/24 at 9:05 am
What is stopping any employer from paying his/her employees minimum wage and then labeling the rest of their salary a tip?
17
Posted on 8/12/24 at 9:08 am to chity
There is just 1 thing stopping them:
The fact that Dems will not win the election for the loophole to transpire.
This post was edited on 8/12/24 at 9:09 am
Posted on 8/12/24 at 9:16 am to chity
I'd love it if my company simply classified my bonus as a tip.
My best guess is they'd have to put some wording in the bill to prevent this from happening, but it would be nice.
My best guess is they'd have to put some wording in the bill to prevent this from happening, but it would be nice.
Posted on 8/12/24 at 9:17 am to Supermoto Tiger
Don’t make this political. This is the money board not the political board.
Posted on 8/12/24 at 9:38 am to chity
quote:
What is stopping any employer from paying his/her employees minimum wage and then labeling the rest of their salary a tip?
Probably not the official definition, but from IRS website it appears they already have a definition for tips:
quote:
Tips include:
Cash tips received directly from customers.
Tips from customers who leave a tip through electronic settlement or payment. This includes a credit card, debit card, gift card or any other electronic payment method.
The value of any noncash tips, such as tickets or other items of value.
Tip amounts received from other employees paid out through tip pools, tip splitting, or other formal/informal tip sharing arrangement.
I am sure some tax accountants/attorneys can find some loopholes or other tax law to apply. But based on this, it would appear that if the funds come from the employer, it must be considered income/salary.
Posted on 8/12/24 at 9:38 am to Supermoto Tiger
Didn’t Trump propose it first?
Posted on 8/12/24 at 9:39 am to chity
quote:
What is stopping any employer from paying his/her employees minimum wage and then labeling the rest of their salary a tip?
Because that is not how it works.
Employers do not tip their employees, jeeze people.
Posted on 8/12/24 at 10:01 am to DarthRebel
(no message)
This post was edited on 10/1/24 at 12:55 pm
Posted on 8/12/24 at 10:21 am to lsuconnman
quote:
So reclassify commissions as tip based performanc
This is one of the most frustrating threads I’ve ever experienced
Posted on 8/12/24 at 10:45 am to lsuconnman
quote:
So reclassify commissions as tip based performance.
A tip has to go directly from customer to employee.
Unless the client is reaching into their wallet and handing their car salesman a couple crisp $100 bills, then there's no loophole to reclassify commissions as tips.
Posted on 8/12/24 at 10:48 am to Weagle25
quote:It's unreal
This is one of the most frustrating threads I’ve ever experienced
Posted on 8/12/24 at 12:15 pm to chity
I’m going to ask my employer to pay me in a tip vs W2 wage.
Posted on 8/12/24 at 12:27 pm to chity
quote:
What is stopping any employer from paying his/her employees minimum wage and then labeling the rest of their salary a tip?
Not sure about today, but there use to be a lower minimum wage for employees that received tips, and there were laws in place to prevent abuse.
For instance, a restaurant could not make a waitress bus or wash dishes, because those were non-tip services and amounted to forcing a waitress to work at below minimum wage.
So, there has been some precedent on classifying employees subject to tips differently and regulating how those employees are used.
The real practical matter of this whole thing to me is the underlying questions:
How much tax revenue is actually out there from tips that the Gov. isn't now getting?
What will it cost to implement and enforce methods of getting that revenue?
What will it cost to the businesses and employees that have to comply with any new laws and regulations?
What is the alternative scenario? Tips are not taxed. Employees are thusly incentivized to upsale to get customers to spend more money. Business realizes more profits. Taxation at this point is more efficient, less regs, lower cost of enforcement by Gov. Business pays more taxes. What does the math tell us?
Posted on 8/12/24 at 2:58 pm to chity
quote:
What is stopping any employer from paying his/her employees minimum wage and then labeling the rest of their salary a tip?
Simple answer. Wages reduce the income for the employer. Lowering the wages paid would make the employer pay more in taxes.
Posted on 8/12/24 at 2:59 pm to WhiskeyThrottle
quote:
My best guess is they'd have to put some wording in the bill to prevent this from happening, but it would be nice.
No tax on tips, up to a certain percentage of your total annual gross income.
Posted on 8/12/24 at 3:55 pm to TDsngumbo
As if we need more importance placed on tipping service economy.
Posted on 8/12/24 at 9:02 pm to chity
what percentage of people even claim tips on their taxes? i wouldn't for the simple reason that i wouldnt keep count.
Posted on 8/12/24 at 9:47 pm to chity
Wouldn’t a true tip have to come from a patron. Not the employer? Sure, you could fudge the numbers but that’s fraud. No different than any other tax fraud
Posted on 8/12/24 at 10:08 pm to faraway
quote:
what percentage of people even claim tips on their taxes? i wouldn't for the simple reason that i wouldnt keep count.
Depends on if the tip was by cash or credit card. My job in high school was all cash tips, and work never asked us to report them. Then I waited tables in college, and most tips were by CC, so most tips were recorded.
Posted on 8/13/24 at 6:46 am to chity
quote:
What is stopping any employer from paying his/her employees minimum wage and then labeling the rest of their salary a tip?
The law?
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