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What's more likely is some bean counter at the IRS realized enforcing taxes on tips cost more money to enforce than they gained, or was barely break even. It's
by beaglesss 2y ago
What's more likely is some bean counter at the IRS realized enforcing taxes on tips cost more money to enforce than they gained, or was barely break even. It's an easy political win at no risk.
- r00fus 2y agoWhat's to prevent corporations and the rich from taking advantage of this? ie, my job is $10k + rest in "tips"?
- mewpmewp2 2y agoYeah, maybe unintuitive, but even if it costs more to collect and enforce taxes than you get from taxes, it also has a preventative side to not abuse it.
- nickfromseattle 2y agoThe easiest seems like who is paying the "tip". If it's your employer, it's taxable compensation. If it's a customer, than it could be a tip. Then there would probably be a bunch of sub-bullet points defining whether a tip is taxable depending on whether you have a direct relationship with the customer tipping you, whether the "tip" is mandatory, or at the discretion of the customer, are you in X roles (e.g. barista) within Y industries (e.g. food services).
- deleted 2y ago[deleted]
- NotACop182 2y agoEasier way is to put a cap on how much you make. Let’s say 70k. Make more you don’t get the exemption prevents the rich from gaming the system. Also define tips by industry. Service sector. End of story.
- tacticalturtle 2y agoIf you put a cap on income, then both you and the IRS need to maintain a record of the tips you received, to prove that you’re on the right side of the cap. I don’t think that saves much in administration costs.
- Pet_Ant 2y agoOkay, I hire a contractor to remodel the bathroom and I pay $1k and $10k in tips. I am the client.
- Matticus_Rex 2y agoI think that's all taxable compensation even under the "no tax on tips" policy suggestions.
- beaglesss 2y agoAnd now you've understood why every handyman job is on paper $1 under the limit at which they need a trades license.
- carlosjobim 2y agoCan you deduct tips paid as a business expense?
- howard941 2y agoIANYTA but yes, it's a deductible expense just like the business meal.
- carlosjobim 2y agoI am not your true accountant?
- howard941 2y agoClose! Not your tax accountant
- bena 2y agoI don't think this is spearheaded by the IRS at all.
- beaglesss 2y agoI don't think so either, but they likely have useful data that politicians can draw off of. Remember Milton Friedman, who wanted to eliminate many forms of taxes, came up with a lot of his policies after working at the Treasury department on taxation mechanisms.
- adrianmonk 2y agoNot exactly. But you're partially right because there is an IRS connection, indirectly. https://www.washingtonpost.com/politics/2024/08/26/trump-tipped-workers-factcheck/ https://www.washingtonpost.com/politics/2024/08/26/trump-tip... TLDR: Tax on tips is hard to enforce. A lot of it goes unreported. In 2023, the IRS wanted to revamp voluntary enforcement programs, consolidating three voluntary programs into one voluntary program. But they don't plan to move forward with that. Trump ran an ad saying Kamala wants to "harass" tipped workers and has "weaponized the IRS", and making himself look like the good guy by promising to simply eliminate the tax. Kamala responded with a competing plan but with some modifications. One modification is to make tips exempt from income tax but still subject to payroll tax, allowing workers to get social security benefits when they retire.