You’re only costing them money if you tip less than 8%. The federal government figures income tax on reported tips or 8% of the total sales, whichever is higher. So, no, if you’re tipping 10% at a nice restaurant, you’re not costing the server any money.
I’d be interested in a cite. Since when do the feds tell employers how little to pay their employees? Maybe I’m misunderstanding you.
Yup. And your friendly Starbucks barista also pays taxes on imputed tip income on each and every paycheck.
Johnny Bravo, hey buddy, can you spare a dime? You know, that hunk of metal your pinching so damn tightly. I’m just trying to supplement my income. :wally :rolleyes:
Sorry, Hilarity N. Suze, I did misunderstand you. You said wage and hour laws mandate a lower wage for “tipped employees.” What I think you meant to say, was that wage laws allow an employer to pay less than the minimum wage for tipped employees. However, the law also requires employers to make up the difference if the employee doesn’t receive enough tip compensation to bring them up to the minimum wage. IRL, I can’t imagine this happens all that often. Unless you work at Starbucks and they paid only the reduced wage. 
BTW, great name!
In Japan, you get excellent service and you are not expected to tip at all.
In other countries where tipping is common practice, the amount of the tip is much lower than the 15%, 18% or 20% you’re expected to give for good service here. In many cases, Tipping 5% or lower is perfectly acceptable. The larger the bill, the smaller the percentage.
I hardly tipped at all before coming to the U.S but now, even if i’m in other countries, I will always tip at least 10%. Why? Because, as much as I initially disliked it, i got used to it and i just wouldn’t feel right if I didn’t.
My point here that there is no point in trying to rationalize the tip amount. You can get great service anywhere and bad service anywhere as well. It’s just a tradition like shaking hands. We should know by know that lots of germs are passed around when you do that but we still do it.
Okay, I think I get the idea and I don’t think I’ll tip low at nice restaurants anymore (and since I hardly ever go to them anyway, it won’t be a big deal). But one more question: aren’t servers in nice restaurants paid more than servers in low-cost places anyway? If so, they don’t “need” the tip quite as much, and this would be justification for giving a higher percentage to the diner server. I can’t see someone in the Ritz-Carlton only making three-fifteen an hour (which is what I made when I worked as a waitress). Also, I don’t drink wine, so I never use the sommelier’s services. Does he still take a chunk of the tip from my table, even though I didn’t drink wine?
In regards to the actual salary of tipped employees, I found this, although I’m sure someone can come up with an actual government cite.
Whereas the Fair Labor Standards Act of 1996 set general minimum wage at $4.75/hr, as far as tipped employees, defined as those who make $30 a month or more in tips, are concerned:
IOW, if it’s expected that your employees make tips, you may pay them less.
In my experience, at every restaurant, fancy or plain, where I’ve known a member of the waitstaff well enough to discuss such matters, they received this sepcial minimum wage as their salary, including the waitress who worked at a place where a couple dining together could not expect to walk out the door without dropping at least a C-note.
Furthermore, having helped a few waitrons fill out their tax forms, tip income is reported on the W-2 (usually based on what was tipped on credit card slips, more on this in a minute), and must be placed on the 1040 or whatever you use. The IRS assumes that people tip a certain amount on average (I forget if they use 15% or something smaller), and that each tipped employee at an establishment gets about the same amount of tips during a year.
They take the restaurant’s reported gross income, divide it by the number of tipped employees, and apply the percentage. If your reported tip income is not at least that amount, the feds assume you are trying to hide tip income from them.
(Before I found this out, I used to, whenever possible, leave a cash tip, even if I was paying by credit card. This was based on my father’s experience as a waiter in the 1960s. Since credit card tip info passes through the hands of restaurant management, the restaurant he worked for felt entitled, once the tips from the CC slips were totaled and pooled, to count itself among the number of people the money should be divided among, as though it were an extra waiter.
I once mentioned this to a friend, a former waiter himself, while we were out with others at a restaurant. He cried bullshit, so we put the question to that night’s waiter. He had just started working there, and didn’t really know yet at that particular place, but confirmed that at his previous waitstaff job, they engaged in just the practice I described.
So now I know that if you tip in cash, there’s a possibility that your server will walk home with tips they didn’t have to tell the restaurant about, but they may be screwed come April 15th if they are not careful. I now tip in whatever way is convenient for me.)
You may dislike the tip system as it stands (I personally am fine with it), but discarding it at this point without making evey waiter quit would require a change in federal wage and tax law.
The IRS cannot make you pay tax on money you didn’t get.
While it’s true that restuarants report tip income based on the method described above, if your actual tip income was less than this report, you may show that difference on your 1040 and pay the lesser tax. (Of course, if your tip income was greater, you must report that and pay the greater tax).
From what I’ve seen, the server tips out the sommelier et. al. from their share of the end-of-the-night pool. It’s pretty much based on the whole evening’s services, not on a table-by-table basis.
If I recall correctly, if a server can document their tip income and prove that it was less than the standard percentage, the IRS will accept that. I’m not sure what exactly constitutes adequate documentation, but I assume that keeping a daily log would go a long way towards that end…
A little digging around, and we can flesh this out (ah, life as the son of an accountant).
Ready?
The restaurant must report the tips employees told them were received, to the feds on Form 8027, and to the waitstaff on Form W-2.
In addition, on Form 8027, the reataurant determines if there is a discrepancy between what was reported by the waitstaff (or “directly tipped” staff, as the IRS calls it, as opposed to the “indirectly tipped” staff, such as busboys and sommeliers, etc.) and 8% of their gross receipts from food and beverages. (The restaurant can use a rate lower than 8%, but that must be justified to and approved by the IRS. So it wasn’t 15% as I mentioned before.) If the discrepancy suggests that there are more tips than reported by the staff, the restaurant may use one of three methods to allocate the missing tip money amongst the directly tipped employees and report the allocation on Form W-2.
In essence, the restaurant says to each waitstaff “Our numbers and methods show that you personally must have made this much more in tips than you told us about, so here’s the record of it so you can tell the feds about it and they can tax you on it.” If there are tips you did not report to your employer, you may owe a penalty on top of your regular income taxes equal to 50% of the SS and Medicare taxes due on the unreported income. Your employer may owe a penalty in this missing income as well.
The only way not to pay tax on the total of your reported and allocated tips from your Form W-2 would be to be able to furnish proof that you did not make all that tip money (Instructions for Form 1040, p.19, top of column 2). The only thing I see mentioned in IRS Pub 531 (Reporting Tip Income) that would constitute proof is a daily tip record kept by you, the employee, which you may devise on your own or use IRS Form 4070A (Employee’s Daily Record of Tips).
Wasn’t that fun?
This prompts another question – Since when did standing ovations become mandatory at live performances? I seriously can’t ever remember a performance I’ve been to, from a school play on up, ever being denied a standing ovation. Frankly, I’m not getting off my ass unless the thing blows me away – it sure as hell takes more than something written by Andrew-f’ing Lloyd Weber to move me.
Hilarity makes a good point. I would assume it requires a certain amount of job experience to be a waiter at a fancy restaurant. In any line of work, you earn more as you gain experience. So I don’t see anything intrinsically unfair about less-experienced waiters getting a lower salary as well as lower tips. I would assume that as one gained experience, they would move up to jobs at more expensive restaurants.
Having said that, I agree with others in this thread that the entire system of tipping is silly and should be abolished.
Yeah, no kidding. Also, I’ve noticed that the piece usually gets a standing ovation, not the performance. I’ve never seen a performance of Mahler’s second symphony, or Beethoven’s ninth, etc. that didn’t get a standing ovation. They just stand because they liked the piece, regardless of how well it was performed. Gee, you programmed a warhorse - congratulations.
I enjoy going out for nice dinners every so often in Boston. We head to either The Top of the Hub or The Oak Room. Either place a dinner for two with some drinks will cost you around $200-250.
On a more regular basis we go out to dinner in local places in Newburyport or Lowell or chains such as The Outback or TGI Fridays. Dinner for two with drinks at these places is around $50-75.
The extra service you get at the nicer places is well worth the increased tip that the 20% earns them. The servers at a regular spot like Outback are often not good. Even if the server is competent, they have many tables to work and simply cannot provide the level of service that the nicer places do.
You usually have to wait to get a new drink or to get the check. You have to be scanning the room to make sure you see your server when they walk by.
When a server only has three tables instead of twelve they cater to your every need. When sitting down, they greet you professionally and have your full attention whenever they speak to you. Also, they do little things like find a napkin that matches the color of the ladies dress to put in her lap. When a drink is empty, they immediately replace it. There is no waiting for anything. Ever.
When my girlfriend went to the bathroom on her birthday, I was able to quickly and quietly get the attention of our waiter and conspire to have her favorite desert brought out with a candle on it after the meal. A simple nod to him at the right moment later on was the only que he needed to bring it out. My SO was thrilled at my thoughtfulness and the server was thrilled with his tip later.
IMO, the servers at the more expensive places earn every penny. They are professionals. They aren’t college students or musicians who happen to have a day job as a server. They are a waiter. That is what they do and they are good at it. YMMV.
I live in CA. Did I miss the memo establishing the standard? I tip for service over and above what is included in normal job functions. The base I use, is probably somewhere around 5%, if only to have something to take away from when poor service occurs.
Could you elaborate on this? Because it suggests that you habitually tip 5% for regular, decent service. If this is the case, you are (checks the forum—no, it’s not the Pit) “somewhat less than generous.”
Nonsense.
What you’re describing is variously known as “tip credits toward minimum wage” - more commonly shortened to “tip credits” or “screwing the poor bloke who can’t afford a meal at the restaurant they work at”
It’s expressly illegal in California, and quite a few other states. BTW - a server can make a fairly decent living in San Francisco (ignoring the hideous cost of living in San Francisco as the minumum wage in SF is in the neighborhood of $8.63/hr.
Restaurants only right? (just because it seems odd some of the things it is cutomary to tip for, and not others)
At a normal restaurant (about $8/plate) I expect to be shown to a table, an order taken in a reasonable amount of time, the food brought to the table, drinks filled as needed, and a bill presented and collected. For that, around 5% seems fair. Faster service, friendlier service, further consideration by the waitor or waitress, would to me, equal service above and beyond what is standard. I expect a little higher standard as the price/quality of the restaurant rises.
It’s a hard thing to imagine any sort of service that is worth 20% or even more as some in this thread have suggested. I am not a charity.
The only caveat is that I don’t tip change, so in cases where the cost of the meal is low, the tip % can get skewed.
My boyfriend has worked in both low-end and high-end establishments during the 3.5 years we’ve been tothether. And no matter how expensive the restaurant, he’s always made $2.13/hour, plus tips. His current restaurant is on the high end at an upscale mall here in Denver, and he only takes home 70% of his tips every day, as he is required to tip out the bartender, the busser, and the food runner. He reports all of his tips so he doesn’t have to worry about owing money at tax time, and he never has a paycheck, since all of his hourly wage gets taken out for taxes. Well, he gets a VOID $0.00 paycheck.
It never ceases to amaze me, being from California where they don’t have the “tip credit” issue, that restaurants can get away with paying their employees so little in so much of the US. My boyfriend looks at it as basically being a contractor with the restaurant; the restaurant allows him to sell food and he gets paid by the patrons for selling it. The restaurant pretty much gives him jack squat.
Since my boyfriend has been waiting tables, I’ve become much more aware of tipping as a practice, and how much it affects my server when I tip well versus tipping poorly. My standard is 20% and that only goes down for bad SERVICE. I never take it out on the server when my food is bad or not to my liking, since that’s a function of the kitchen and not the server, but many people do. If you get bad food at a restaurant, tell the manager or ask for a comment card. Don’t stiff the server if you got good service. But also, going out to eat with my boyfriend is an interesting experience, since he KNOWS good service vs. bad. There’s no excuse for BAD service under any circumstance - if the restaurant is overcrowded, the server will be very busy and may not provide AS GOOD service as if the restaurant were only half-full, but you should never be treated badly by a server. It’s that person’s job to make you feel like you had an enjoyable all-around experience.
No, you’re not. And neither is the wait staff.
I’ve said before that i don’t very much like the tipping system, and i reiterate that. But the fact is that this is how it works in North America, and if you’re not going to tip the staff appropriately, you should stay home and cook your own food, or eat at McDonalds.
Also, you say you eat at places where the typical price is $8 a plate. Lets say you have a plate of food and a drink for lunch or dinner. That would bring your total to maybe $15. You would really tip 75c or (given that you don’t tip change) $1 to the server? That is pretty stingy, my friend.