Tipping

[rgoble5972]

Okay, I promise this will be the last boring tax law post that I make on this subject!


In regards to the 8% of total sales = tips.

Many food and beverage establishments use 8% of gross receipts as a "safe harbor" amount for tip reporting since that percentage is used in IRC §6053 regarding the reporting of tips. This is not a lawful practice.

This provision requires large food and beverage establishments to report to the IRS gross receipts, charge receipts, charged tips, tips reported by the employees and, where the aggregate amount of tips reported by employees is less than 8% of gross receipts, the amount of the deficiency allocable to each employee.

To quote from restaurant.org:
"Many restaurant employers and restaurant employees may have heard the false rumor that tip-earners only need to report tips equal to 8% (or perhaps some other number, such as 10%) of their sales. That's a widespread misconception. The law requires employees to report and pay taxes on 100% of the tips they keep after tip-outs. It's that simple.

The 8% figure is simply a threshold below which many employers must allocate tips and report certain additional information to the IRS. The IRS can use this information to flag restaurants where employees may be underreporting tips."

Restaurant.org is a good resource for both employees and employers who are subject to tip reporting requirements. Or, do a Google search using the words "tip," "reporting," and "8%" to find other resources

Finally, employees who split tips with other workers should report only their final share.

Okay, I promise, that's all. You can all wake up now and go back to your regularly scheduled posting...and don't forget to be nice to your server!

P.S. Mickeyluver37--Congratulations on your soon-to-be CPAness!

 

[UKAnnie]

Robin - thanks for a very clear explanation. We Brits I know are not the best tippers (sorry if I offend the generous Brit tippers), but it's just not as common in our culture, and when we do tip I know some of us are not the most generous. I am married to a very generous man generally, but he seems to have a 'thing' against tipping - if he does it's usually not enough, and I feel very embarrassed about it, and often add dollars of my own, even though he gives me 'the look'.

His excuses are:
1. Nobody tips me for doing my job.
2. If waiting is such a poorly paid job, they should leave.
3. If all the wait staff leave then employers will have to give them a decent wage.

I explain that means that the price of the meals will go up and he says "that's fine with me"!

Anyway, I'll keep trying with him!.

Ann.

 

[ducklite]

It's not always so easy to leave. Many people who wait tables do so because the CAN'T find other jobs. Many are students putting themselves through university and they wait tables as the schedule can work around their classes. not a lot of executive and professional positions fit with a University class schedule.

I wish that all porr tippers would just have to work one stinking shift with even "average" customers. They'd change their tune really quickly. In fact my bet is that most wouldn't last one shift.

Until he can learn to tip appropriately, thanks for leaving the extra for the servers. "When in Rome, do as the Romans do" can be applied here. In the US tipping is part of the culture. If I went to Saudi Arabia I'd cover my hair in deference to local custom. In Japan I'd take off my shoes when entering a home in deference to local custom. Tipping in accord with local custom here in the US should be practiced by all guests from other countries.

Anne

 

[rgoble5972]

UKAnnie,

I can understand your husband's point of view. It does seem unfair sometimes that we seem to be subsidizing the restaurant owner by paying the greater portion of his employees' wages for him/her. Even when you know that, if the owner *did* pay his/her employees decent wages, they would have to dramatically raise the price of their meals.

I guess we should be grateful that, if a server really *is* lousy, we do have the option of leaving a smaller tip to send a message to the server that they need to improve their skills, instead of being forced to pay a higher price for a meal to make up for the lousy server's salary.

Maybe we *should* switch all jobs to tip-based salaries. If you like the way your accountant prepares your taxes, then you pay him more. If you're satisified with the way the pilot landed your airplane, more money for him!

On second thought, I'm glad that I'm allowed to have bad days on the job every now and then, unlike servers who have to be "on" all the time. Thanks for keeping after your husband about tipping. You know the saying about how hard it is to teach an old dog new tricks (not implying that your husband is an "old dog," of course !)

 

[Belle5]

If we're going to feel sorry for buffet servers we might start with places like Golden Corral (yuk) or Shoney's. These people probably don't see a lot of tipping. My family does not generally get out of a WDW buffet for under $150 plus tax and tip. Right off the top our servers are getting at least $15 in tip money if we tip the minimum of 10%. Usually, we would leave about $20 on a bill of $150. That's darn good money for filling the water and clearing plates for an hour, IMO. (If they have 5 tables they're going to be doing quite well during that hour.) When dining at the full service restaurants at home (Chili's, Friday's) we would never run up a tab that high -- therefore the server that gives full service would rarely see a tip that large from our family. By virtue of the higher cost of WDW restaurants these servers are making a lot just based on the percentages.

 

[papopup]

I feel tipping is not an automatic thing I must do.If I get good service,15%,great service 20% and up depending on how great the service was.Bad service and the tip goes way down.When I sit down for a meal I want to relax and enjoy and not be rushed or hurried.On our recent trip we ate at Ohana and the food was great but the service was terrible,all you can eat as long as all you can eat is what they give you and you eat it quickly and get out.It was our servers and not the restaurant,the table next to us had a different server and they were treated great.They were offered more food until they said no more thank you,where we got what they gave us the first time and had to look for them after that,well they had to look for the tip after we left and they didn't find much.

 

[ducklite]

Belle--that might be the case where you live, but here in NJ where I live the prices are the same or higher than a comparable meal at WDW.

We just ate a Legal Seafoods last night, had less food then we would have at Cape May cafe, and had a $100 tab--for the two of us, before tip.

Anne

 

[MrsPete]

I waited tables when I was in college. It was hard work physically, but it was a low-skill job. A person of average intelligence could do this job with moderate skill after one evening of on-the-job training. A person who wants to excell at waiting will do so within a very short amount of time.

I had a student teacher last semester who worked weekends waiting tables. She told me that on a good weekend she'd make $500 in tips -- that's more than I make in a week of teaching. Plus she her meals free at the restaurant. She was looking to get out of waitressing because she was approaching 30 and saw that she wouldn't be able to keep up the physical end of it forever, plus she was tired of the late hours.

Everyone complains that serving is "such hard work." I work very hard as a teacher. My husband works his butt off as an engineer. What work isn't hard? If it was fun, they wouldn't have to pay you to do it!

 

[ducklite]

I'm the webmaster for an International Fortune 200, and my years of waitressing were much harder than my day gig as a professional. I don't have to deal with rotten people (OK, I do, but I don't have to be nice to them) I don't have manual labor (those trays are much heavier than my laptop) and I have better hours. Yes, I'm still on call 24/7 (have to take a cruise to leave it behind) but at least I'm home at night instead of in a restaurant. Oh, and I make a lot more money in comparision to the amount of effort.

IMHO it takes more than a few days training to be an excellent, polished server. That takes years of practice. JMHO.

Anne