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What I have been told is that they want the tips in cash to not leave a trail for tax authorities to see. If they get the tip in cash they don't report it as in
by rypskar 9y ago
What I have been told is that they want the tips in cash to not leave a trail for tax authorities to see. If they get the tip in cash they don't report it as income, if the tip is added to the card it get registered as tip and tax have to be paid. So basically tip is not only a way to get around paying the workers a livable salary but also a way to avoid taxes
- walshemj 9y agoIts mainly to avoid the employer keeping the tip for them selves
- FireBeyond 9y agoEh - you only have to read forums to realize that it's a lot more to do with the taxes. I have heard more BS excuses from servers on forums: "The government demands we pay tax on these tips, even when we don't get them". No, the government recognizes you're in a cash-heavy industry, and would like you to document things. If you do, you pay tax on the tips you get, not the default amount. Quick way to get banned from said forums? Ask if they are sure to supply documentation when they get tips above and beyond that amount to the IRS. They also like to claim that "20% is cheap, you should be aiming for 25%"... eh.