@doreen said earlier in the thread (post #25, I think) that some servers prefer the tipping system, so presumably it does benefit them in at least some circumstances.
The size of a tip can be calibrated to the amount and quality of service the customer receives. So ideally tipping can benefit both the better, more conscientious servers and their customers, by incentivizing and rewarding good service.
I have and absent of any indication otherwise I’ve tipped what I consider to be adequate.
I avoid eating out at tipped places as much as possible and when we go as a family to the USA we eat mainly at home or fast food that requires no tipping.
I find it a pretty distasteful system and it certainly seems to provoke somewhat overbearing servers, I want them to take my order, bring the right food and be otherwise invisible untilI I need them.
The eagerness for tips seems to breed the sort of behaviour that I find off-putting. Certainly I haven’t noticed that the service in the USA is any better than I’ve found elsewhere in the world where tipping is not standard. I’d say that best of all was in Japan.
Why pity? If I choose to go to places that I enjoy going to and avoid places I don’t…what is there to pity?
I’m actively choosing the greater pleasure.
On a business trip I was once offered tickets to an exclusive nightclub in the VIP area and I declined. I actively dislike nightclubs, free booze of not. Everyone who did go was so disappointed for me that I missed out and of course that was completely misplaced.
Instead, a colleague and I walked the streets and the markets, saw the sights and indulged in street food and other treats and had an infinitely better time than I would ever have had in a nightclub.
This is true. Wait staff, and other people in typically tipped professions, get taxed on 10% (or it may have gone up to 15%) above their gross pay, on the assumption that they were tipped. This is why cash tips are appreciated especially, because a large tip that is on the record, such as a charge slip for a credit card, will get taxed at the full amount. It’s better, if you plan to tip above what the person will be taxed on, to tip in cash, because then the worker won’t get taxed on the full amount of the tip. It’s not really dishonest, because it helps to compensate for people who tip below the taxed amount, or don’t tip at all.
This is why wait staff go so irate with people who don’t tip at all. Those customers just cost them money.
Pre-pandemic, I went to a local coffee shop regularly. No table service. A place that’s required to pay minimum wage, and, in fact, brags about paying more and offering a living wage. There’s a tip jar. I never tipped. But I always smiled at the staff, and when relevant, used their names. On the rare occasions when the place wasn’t busy, I sometimes exchanged a couple of words with them.
Up until the pandemic, I got excellent service, and they always smiled at me, too. Some years they gave me a Christmas card signed by all the staff, which I thought was a nice gesture. Yes, they know the regulars, even without tips.
Some employers require waitstaff to report 8-10% of sales as tips, because they believe it’s some sort of safe harbor and that as long as servers report that much, the IRS won’t investigate tip reporting. Some servers also beleive this. But it’s not true. It may well be that the IRS is more likely to investigate establishments that report a 5% tip rate rather than those than report 10%, but if that’s the case , it’s a matter of priorities rather than that reporting 10% means you’re safe no matter what.
That said, the IRS requires servers to report and pay taxes on all tips. If a server truly makes only 5% or even 1% in tips, then that is what they are to report and pay taxes on. The problem, of course ,will be getting the IRS to believe that you made that little in tips and still kept the job if the restaurant is a sit-down restaurant that pays sub-minimum. It will be far easier to get them to believe it if it’s a takeout/fast food restaurant or one that pays servers above minimum wage.
Customers who don’t tip don’t actually cost the servers money- because the server is only obligated to report and pay taxes on the tip they receive. All the tips they receive - even when they have a shift or a week or a month when they average 15% in cash tips. This
is not a legal way to avoid taxes because it requires the server not to report that tip (as they are obligated to do ) . It’s no more legal than me working off the books and not paying income taxes.
Well, it’s also a problem because the IRS requires most restaurants with tipped staff to ensure they are tipped at least 8%
If the total tips reported by all employees at a large food or beverage establishment are less than 8 percent of the gross receipts (or a lower rate approved by the IRS), the employer must allocate the difference among the employees who receive tips.
I’m guessing that “lower rate approved by the IRS” applies to places like McDonalds that pay minimum wage and don’t generate a lot of tips.
However, you do not need to report tips allocated to you by your employer on your federal income tax return if you have adequate records to show that you received less tips in the year than the allocated amount.
I am going to guess that using the forms referenced in that document on a daily basis ( rather than all filled out at once when there is an audit) would be sufficient *- if in fact, there is such a thing as a person who keeps a job as a server in an establishment where tips are customary who does not receive tips of 8% over the course of a year. Which I’m not at all sure there is.
Gamblers generally keep records for their taxes by using some sort of contemporaneous log- I don’t see why it would be different for servers