Yes, and what is the “A” in AGI? It’s a bit over $10k, if they are single and childless.
The average pay for a server is $23,020, which, if you do the math, you will see is greater than the adjustment. Therefore, they would not be getting all of their taxes refunded.
Now, do some servers not pay federal taxes? I am sure there are a number that don’t, as they either only work part time, or have a child or two that bumps their deductions up, (if they are married, then they are paying on the combined income, so while being married does pop up their deductions, it will in most cases pop up their wages by even more), but, given that the average income is twice that of the minimum required before paying fed taxes, it is simple math to say that the majority of servers do in fact pay federal income tax.
Your sarcasm is noted. I also note that you didn’t bother to respond to the rest of my post, which establishes exactly why your post was in error, even had you actually noted the part I emphasized. So your sarcasm is pointless. :dubious:
That most servers have the serving job as their primary job?
To be fair, a quick google did not find that particular stat, but I already showed you stats that show that the majority of them would pay federal taxes, which is what your unsupported and uncited claim was about, and if they do have another job as their primary, then that just puts them into a higher tax bracket, which would make your claim even less related to reality.
You made the claim that most do not pay federal taxes. And chance you will back that up?
Many households which don’t pay federal income tax don’t because of credits for minors or other non-working members of the household. But minors and other non-workers aren’t households filing tax returns. So you’re really arguing in that case (assuming reasonableness) that it’s OK these households don’t pay income tax, but are presenting it as an argument it’s incorrect to say the households don’t pay income tax, but in fact they don’t. In case of retirees there’s more of a correspondence between individual and household. Around 44% of the 46% are households where tax treatment for the elderly zeroes out the federal tax liability, per first link.
Also around 42% of the 46% had refundable negative income tax liabilities offsetting some or all of their FICA tax, which isn’t included in ‘don’t pay income tax’*. This is per second link ‘debunking’ Romney’s 2012 comment related to this issue. But the theme of ‘debunking’ on this issue tends, like your post IMO, to be ‘well this is how all reasonable people must agree it should work’ dressed up as ‘conservatives are lying about this’, which they aren’t exactly, necessarily.
*though OTOH is supposed at some level to be an individual contribution for an individual benefit. Despite all the vagaries of that economic and accounting wise, it’s less than obvious IMO that people have no obligation for their own old age medical/pension benefits and the baseline ‘should’ be paying nothing in tax whatsoever until one is ‘well off’. That’s purely a value judgment on one level, but IMO there is also somewhat separate an issue of moral hazard when voting for more govt spending with the expectation of the voter they will pay for none of it. FICA is not ‘regressive’, it’s a flatish (truncated) tax for a flatish (truncated) benefit. I have my ideas for a better system like almost everybody else does, but again it’s not obvious IMO the basic principal should be ‘other people strictly pay for my old age benefits unless I’m well off’. The rough principal as it is is more like what it should be, IMO.
Oh, please. You are asserting that “They also probably don’t pay any federal income taxes” isn’t an assertion that “most do not pay federal taxes”? I would read your statement as an assertion that not only most, but actually close to ALL don’t pay federal taxes. So unless your weasel here is that the taxes they pay aren’t federal income taxes, I think you’re not being very accurate here.
In my mind, this isn’t the forum for arguing. At the same time, there’s a difference between federal taxes and federal income taxes, which I’m sure you know.
They also say a good comedian does not need to explain their jokes…so let me explain:
“Any transfer to an individual, either directly or indirectly, where full consideration (measured in money or money’s worth) is not received in return”
This was the definition of “gift” so your argument says any transfer is a gift. I assume you meant the opposite.
“where” creates a clause modifying “transfer” - thus definition of gift applies to transfers “where” money’s worth is not received.
Hence, if the waiter gave you bad service and you tipped anyway (so as not to appear a cheapskate, let’s say) ergo, you gave a gift since a tip is for good service.
However, to get back to the OP - as I said before, calling a tail a leg doesn’t make it one. The IRS is not stupid, and they are reasonably greedy. People do work waiting tables, they get money as a result of this work, it is therefore earned income and taxed like any other earned income. Since the amount of tips has risen significantly (from 10% to 20%, in the last while) it is a significant part of income and the IRS wants its pound of flesh too.
You can’t change that by pretending to give it a name “gift”. If so, I could program computers as an unpaid volunteer, and the boss could give me a gift every so often, and I would owe no taxes. Why should waiters get all the tax-free advantages.
That sounds interesting, if you have any search terms or something that might help me get a more in-depth story about such examples (or details/links that you could relate).
IF that were even the case, such an outlandishly hypothetical person would be more than covered by the standard deduction at least for INCOME taxes. No way getting around FICA but that’s probably the only amount that would be tax.
As far as the person “making $3 an hour,” I have never known any. I’m not saying there aren’t servers and other tipped employees who don’t manage to make much money. I’m sure they exist. However, in my experience servers were by far the highest earners in a restaurant. I knew dining room managers on pretty good salaries who would jump at the chance to cover a shift so they could get that sweet server cash. Workers in the kitchen would wish they were personable/outgoing/attractive/well-spoken enough to wait tables instead so they could make more money. Most servers I knew expected a $0 paycheck (to cover taxes and meals) and did not care. I had a GF who put herself through a private college while waiting tables. Meanwhile I worked in the kitchen 7 days a week for years at a time and barely had any money.
As far as reporting goes, I knew some servers and bartenders who under-reported and faced consequences when they went to do things like buy houses. For example, I knew a married couple who made 6 figures a year waiting tables but they couldn’t get approved to buy a house because their reported income was something like 30 grand.
You didn’t, in fact. But, the antecedent “they” referred to those tipped workers who earn at least state or federal minimum wage (as opposed to $3.00/hr), thanks to labor laws that require employers to pay enough to make up for any shortfall in tips received to bring the workers’ wages up to the statutory minimum wage; in short, ALL tipped employees.
So, while you’re correct to protest that you didn’t say anything about “most,” you clearly did imply “all.”
There is a slight difference between a ‘hobby’ and a ‘business’, but I believe the essential difference is that you can only deduct hobby expenses up to the amount of hobby income (whereas a business loss can offset other income not from the business, too), so a ‘hobby’ is actually worse than a ‘business’, tax-wise.
Again, in practice, the IRS will not care if one time your buddy gave you $50 for the hassle and gas of driving him to the airport. But if you’re driving six different people a day to the airport, five days a week, they are going to be rather upset if you don’t declare that as income.