Frequently I will be at a restaurant and not have any cash with me. No big problem, I just pay with a credit card or other none cash form. Being without cash I also have to tip the server on the credit card statement. But I always wonder if the server actually gets the tip or gets all of it. Can any body who receives tips tell me if you get what was intended for you and are there any hassles involved with getting your tips from the business?
My experience is from a good ten years ago, so please take it with a large grain of salt.
When I got credit card tips, I did get all of that money, but I got it a few days later. They had boxes with server names on them, and they stuffed your money in the box two or three days after the transaction. I don’t know why they waited, and I was young and stupid and didn’t ask. The boxes were also accessible to anyone walking by, which made me uncomfortable. It was basically a greasy spoon, so hopefully better places have a better system for this.
I always liked getting cash tips better than credit card, and so I try to leave cash tips even when using a credit card/debit card to pay for a meal. Mostly, though, our house works on a cash basis, so we just leave the cash tip along with the cash payment.
Yes, they get all that tip. Generally in a check. It’s likely even safer than cash- no chance of it being stolen off the table- which does happen.
However, they do have to pay Income Taxes on all of it. Most servers do not fully report cash tips.
So- with cash there is a small chance of your tip being stolen and being thought a cheapskate- and there is a high chance of contributing to Income Tax fraud. Of course, the less dishonest people pay, the more honest people have to make up.
OTOH,with CC, the server will have a little less to take home.
Then there’s “tip outs”, which is another huge kettle of fish.
I pay almost always by CC. Not only that, I get my small “bonus” from the CC company for every $$ I charge.
Sometimes, if I go there a lot, I’ll give a large ($20) cash gift directly to a regular server around the holidays, with a holiday greeting. That could be considered a “gift” and thus not taxable.
I’m a current server. I get it all (less taxes, more on that in a bit), and I get it in cash that night.
Servers at my restaurant keep their own bank. This means I keep all the cash I get from customers and turn in the amount of my sales at the end of the night. My credit card tips are deducted from the amount I owe the restaurant. Example:
I have $1000 in sales for the night. $800 was paid by credit card, $200 in cash, and I had $150 in charge tips. In this case, I owe the restaurant $50 and I will keep the other $150 in my pocket. Sometimes I will have more charge tips than the amount of cash I collected, in which case the restaurant will owe me at the end of the night, and they pay me in cash.
Now, here’s where things get a little muddy. All charge tips are automatically reported for tax purposes, and those taxes come out of my paycheck from my hourly wage. I am also expected to “tip-out” 25-30% of my tips to other workers (bussers, expediters, & bartenders) each night. So the effect is, if I make too much in charge tips, I will end up paying taxes on money I didn’t actually make. I keep a tip log that details who I paid and how much each night so I can deduct it from my taxes. But it is true that most servers generally do not report all of their cash tips, and this is one important reason. Some tax advisors will say it is perfectly OK to take these tip-outs off the top when reporting cash tips. Although most people pay by credit card these days, there are usually enough cash-payers to compensate. So that’s that.
As a libertarian I would consider it ‘freeing money from the government’s clutches’ rather than ‘tax fraud’ but we’re getting close to GD territory. I leave a cash tip unless I just don’t have it in my wallet at the time, theft risk or no. I leave the tip to the back of a booth or center of the table to make it more obvious if some schnook decides to take it.*
I work for a credit card processor. All of the restaurant software we have has the ability to add a tip to the base amount and generate a tip report totalling each server’s tip total for the day. Some of the software has the ability to deduct a percentage from the tip total. Perhaps it’s for handling the tip-out, as Rigamarole alluded to but there’s no way of divvying up the pool of deducted tip money. I suspect the owners just keep it. The good part is, only one place – a fancy membership resort by the name of it – has wanted that option turned on.
StuffLikeThatThere, when a business submits its credit transactions for the day, it take two or three days for those transactions’ amounts to be deposited into the business’ bank account. They might have had tight cash flow issues or something. Putting the money in unsecure boxes does sound weird.
*My model railroad club used to eat as a group ( eight to a dozen or so) after our Friday-night meetings in a particular coffee shop. The shop had a room in the back where they’d put groups such as ours, the tables already being arranged for such. One night there was some group we’d never seen before, and a church group we’d seen a few times before already eating. The first group left, leaving a cash tip on the table, then a few minutes later the church group also finished and left. One of the C.G.'s members lingered behind and took a couple of the bills from the first group’s tip, pocketing it. Two of our larger members immediately got up and caught up with the group at the counter. We never saw the church group again.
That’d be theft, and the owners would go to jail, not to mention having their asses sued off. No way are they “just keeping it”.
Is this a restaurant policy - you receive $75 but are reported as having received $100? Sounds very dubious (if not downright illegal).
It’s not an official policy, as in California forced tip-pooling is basically illegal, but it is a strongly suggested “guideline”.
Basically, I receive the $100 but I voluntarily (sort of, heh) give $15 to the busser, $5 each to the expediter and bartender (for making my drinks, since he has to take time away from his customers who are actually sitting at the bar and tipping him directly to make them). So yeah, I never take home the $100, only $75, and am taxed on the $100 - IF all $100 were charge tips. But like I said, there are usually some cash-payers and I will legitimately not report the tips that I end up giving away before the night is over.
This agrees with my experience from 20 years ago. I was the closing manager in a Lums in College Park MD. Waiters were allowed walk up to the cash register during slow periods and ask for any cash tips they had accrued. We kept the charge slips in a little divider thingy so I could grab each waiter’s group of slips and total up the amount s/he was owed.
If anybody was missed or forgot to collect his tips before s/he left, the register would show over (a no-no) when I balanced it at closing.