If you’re waiting tables, and a customer pays with a credit card and puts the tip on the card, do you take your tip from the register at the time of the transaction, or does it all get tallied up at the end of the day?
It depends on how your restaurant does the tallying. Some might give it to you right away but I’ve never worked anywhere that did that. They were tallied and given to me at the end of the night, which makes more sense to me. I would keep track myself just to make sure I got what I was supposed to get.
We were tallied once every two weeks and picked up and envelope from the manager. It was kind of a nice treat sometimes, to get a couple hundred dollars you hadn’t counted on. (Usually it was more like $75)
Is there any tax benefit to getting cash? I had a great waitress the other night and I put 8 bucks on the credit card and left her a ten on the table.
Most places give out credit card tips @ the end of the shift. Usually, Servers keep a till. At the end of the shift, the servers sales are totalled, credit card tips are deducted from the total sales numbers, then this new amount is tendered to the restaurant. Whatever’s left is the server’s.
MikeG,
The only tax benefit that I can think of is an illegal one. ALL credit card tips MUST be reported as there’s a physical record of them. However, it is possible, however unlikely, that a server could “underreport” the amount of money earned in cash tips. As this is illegal, I doubt that many, if any, servers would ever choose to cheat the IRS.
What do servers prefer?
There was a Court decision here last year that restaurants don’t have to give credit card tips to servers. Since I read that I’ve never left a credit card tip.
Your right that the tax benefit is an illegal one, but considering that even someone who keeps a clear record of their tips are likely to be screwed someway by the IRS if they happen to get an audit, its always safer with cash tips.
There is another benefit to getting tipped in cash…you don’t have to pay the discount rate(the percentage that credit card companies charge companies for using the card) for the tip portion of the charge. Most servers pay this discount rate on their tips,Ibelieve, whether they know it or not.
I never really cared too much, but cash tips are better from the servers standpoint.
CASH
You ARE a Furner, right, and not a Merkan?
In America if they didn’t give credit card tips to staff then they’d probably a) be in violation of labor laws, as regards minimum wage and b) not have any help in very short order.
When I waited, we got tips at the end of the night, but credit cards weren’t used as universally back in those dark days. Also at the time the IRS said that your tips had to be X%, where X was between 8-12 (I don’t remember). Most of us made about 15% and reported whatever X was. If you made less and could document it, then you could pay taxes on less than X%. Not sure if them’s still the rules.
SimonX: I’m an American expat.
ruadh do you have a cite for this? I was pretty shocked when I read it. I googled for it and all I came up with was this link referring to a case that arose in the UK I think.
(You have to scroll down to page 2 - heading ‘Subsidising Low Pay’)
http://www.thompsons.law.co.uk/ltext/dload/lelr0073.pdf
Still it scared me and now I feel guilty because I just gave someone a credit card tip last night (and a good one). I’m tipping cash from now on.
The one thing about tipping cash is I do sometimes wonder if someone else will pick it up be they dishonest thieving restaurant patron or dishonest thieving fellow staff member and it’s kind of embarrassing and also sometimes inconvenient to wait to give it directly into the waiter’s hand.
When I use my card I usually leave a cash tip - anybody that has been screwed by the Man should appreciate this method.
Could a CC receipt with no tip be used as documentation of being paid less than “X”?
Youdneverguess, here is the pit thread I started when this ruling was handed down.
I misremembered it a bit, but it’s still clear that waiters here lose out with credit card tips.
I guess I’d like to leave cash tips, but I avoid places that are “cash only” for never having cash. Is it bad form or manners to ask waitpersons the following at any particular establishment?:
(1) do they receive their credit card tips as written on the tip line?
(2) do they receive it that night?
(3) and for completeness, are tips pooled or go to the server? I usually tip well, but knowing that some lazy slob would get part of the tip for my waitress’s good service would compell me to change my tipping strategy a little bit.
If the choice is answering your questions about tipping vs. possibly not getting a tip, most servers would be happy to answer your questions.
As for question (3), most often tips aren’t “split,” except in cheesy joints. If you don’t want your tip being shared by the lazy slob, then go ahead and tip your server well anyway. Your hardworking servers will probably take care of the lazy co-worker problem themselves before too long.
Side question…
How do servers handle it when multiple servers wait on a table.
A few months ago my wife and I had a situation where a different person took our order, brought us our salads and brought us our dinners.
Not that I would ever encourage tax fraud, but if you tip in cash, in the USA, you’re probably contributing to tax fraud and also helping the waitress make a more comfortable living.
In America, wait staff are usually paid a fixed per-hour rate (below minimum wage) in addition to their tips. This is so that, when their tips are counted up, there will be something from which to electronically deduct social security payments and taxes.
Credit card tips leave a paper trail, and I believe that social security payments and taxes are tallied up for these in many establishments, and deducted from the regular paycheck.
Cash tips, however, are generally reported on the honor system, and I’ve heard anecdotal evidence that restaurants encourage their wait staff to declare a “flat rate” of tips week in and week out based on the number of shifts they work.
For example, in a restaurant with a $15.00/person average bill at dinner, a waitress might declare five evening shifts at $50/shift and one (much less profitable) breakfast shift at $20 for a total (declared) income of $270 for six days’ work. The truth could be double that, or higher, but when the “tip” income is declared, the taxes deducted are lower. This means that the wait staff both (a) sit in a lower tax bracket and therefore get a good return (usually 100%) and (b) have less of their money sitting in Uncle Sam’s pocket for the duration of the year.
To sum up: credit card tips are traceable, and so it is improbable that anyone would risk underreporting income on these. Cash is, and always will be, the legal tender medium of choice for making your income less taxable.
As for Odinoneeye’s question, I worked as a busboy under a system similar to what you mention. The busboy, tablesetter, and hostess all “served” the waitresses in my restaurant–two busboys and two tablesetters covered the floor, while it took up to sixteen waitresses. The waitresses collected the tips from the table, and then at the end of the night, “tipped out” ten percent or so to their busboy and to their tablesetter. Since I got my tips from eight waitresses, it behooved me to move quickly to give them a better turnover rate (better turnover means more tips for me to share in). Each waitress had been a tablesetter (dependent on other waitresses’ generosity) before being allowed to wait tables, so the system worked out pretty well.
Jurph, I can’t find a cite, but I seem to recall reading that the IRS assumes 15% of the total bill, should an audit be conducted, and that is the amount that the employer is supposed to report. Some waitresses will claim, then, that by not leaving a tip you’re actually taking money from them, since they’re paying taxes on something they never, ever saw.