question about claiming tips . ..

[haaaylee]

for the first time i'm working at a place that actually makes me claim my tips, and not being used to this i am a bit confused as to how it works. and i can't find a link in google search that really answers my question.

in my paycheck it appears as if they take off what i claimed from my check. . .
and if this is what it appears to be, does that mean i would get it back on my tax return?

etc.


??

[Bruno]

If memory serves me correctly from my bartending days, they are taxing you based on the amount you claim you earned in tips (or what they calculate you "should have" earned in tips based upon a percentage of your sales) plus your hourly wage. That is your total income.

How much, if any, you get back next year when you file your tax return depends upon a variety of factors such as your tax bracket, number of dependents, etc.

[anaconda]

It sounds like your employer is declaring to the taxing authorities your tip income plus your hourly income. Which is correct as long as we are trying to avoid confrontations with the IRS and state taxing authorities. If you are paid your tips in cash then the only source of with holdings for the government is your hourly wages. I have worked in restaurants where my paycheck is zero because all of the hourly wages earned is used up for with holdings from my TOTAL income, which includes the tips and was substantially more.

What I'm not quite clear on is when you said "they take off what I claimed..' I think in some states they can reduce your hourly pay depending on your tip income. But I think this is largely illegal throughout the country now. But I think you just meant to say they are taking out with holdings based upon your total declared income.

[angelatc]

They're supposed to report your hourly wage, plus what you tell them you got in tips. ( If all your business is done by charge card, I guess you won't need to report tips. ) They with hold taxes based on that amount.

Some larger establishments use an allocated tips system - they just assume you made a certain percentage in tips and base the witholdings on that. If you keep good records of your tips, you can reduce that amount when you file your taxes. (Provided you actually earned less. :) )

At the end of the year, if you haven't claimed enough in tips, the IRS will assume you're lying and hold you accountable for taxes on that money. I haven't kept up with the rate, IIRC it used to be something like 8% of the total food and drink sales.

[haaaylee]

I'm in Texas.

I get the cash tips without claiming them, I am only asked to claim the credit card tips. I made $44 for this paycheck in CC tips and combined with SS & Medi. withholding that is exactly how much was taken from my Gross Total.

[angelatc]

I'm in Texas.

I made $44 for this paycheck in CC tips and combined with SS & Medi. withholding that is exactly how much was taken from my Gross Total.

LOL! Don't post the part that you're not earning!!!

So, you made $44 in tips, and they subtracted it from your hourly wage? It could be just a coincidence that the withholding amount is the same as your tip amount.

I think the minimum wage is lower for people earning tips....is that true for you?

If you want to scan me your stub, I can look at it for you. PM me and I'll send you my email address.

[haaaylee]

LOL! Don't post the part that you're not earning!!!

So, you made $44 in tips, and they subtracted it from your hourly wage? It could be just a coincidence that the withholding amount is the same as your tip amount.

I think the minimum wage is lower for people earning tips....is that true for you?

If you want to scan me your stub, I can look at it for you. PM me and I'll send you my email address.

(whoops! ha.)


And if I recall correctly this "coincidence" happened on my last paycheck as well though. And I actually make, per hour, a fair amount more than minimum wage. Thankfully. If you are a server or waitress you make $2.13/hr because of tips. But for most other positions you have to get min. wage or more.


I don't have a scanner to send you my stub, but if you PM me i can give you the details. I should still have my old stub as well . ..

[Shinerxx]

When I waited tables over a decade ago I would claim 9-10% of total sales. At the end of the night if I had $500 in cash, checks, and CC receipts I would claim around $50 in tips. There was a waitress I worked with that claimed zero for over a year and eventually got caught by the tax man. She was a single mother with two children and they took her to the cleaners for not filing a return.