Last edited Mon Jun 10, 2024, 08:35 PM - Edit history (1)
The amount reported on her W-2 by her employer wasn't even close to the actual tips she received working at Starbucks. (They have now changed to a system that tracks and reports all tips.) People are generally tipping about 15-20% - so that leaves7%-12% tax free for anyone reporting only what their employer reports.
And - employees are supposed to be reconciling their tips, reporting discrepancies to their employer, so that their employer reports an accurate amount on the tax return. But that is an added accounting burden on both employees and employers that I've never seen any employee do in real life.
Eliminating (or reducing) taxes for tipped employees just exascerbates the problem (and gives a tax break to tipped employees that it doesn't give to other workers with similarly low incomes).
Just treat tipped employees the same as every other worker earning a wage is treated - no more sub-minimum wage. That way workers aren't shorted if they are assigned the morning shift and don't earn 8% (and don't reconcile down their income - which would require their employer to pay more), other workers don't get a tax-free bonus (if they don't reconcile up their income), and customers pay an equal amount for equal food - and those of us with consciences aren't stuck "voluntarily" footing the bill for both those who don't tip and employers who don't pay a fair wage.
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