General Discussion

SheilaT

(23,156 posts)

19. Tips have not always been taxed.

Fri May 15, 2015, 02:08 PM

May 2015

I recall that there was a time when being a server was highly a highly desirable job because the tips were untaxed. My guess is that once a lot of checks started being paid by credit card and the tips became knowable, that was when the IRS decided they could start taxing them. I'm pretty sure it took a while before they decided to assume all customers tipped and therefore the tips, even the cash ones, were knowable.

I always tip in cash because I simply don't trust all restaurants to give the tips immediately to the server, even though they are supposed to. And they're not supposed to withhold whatever percentage goes to the credit card company.

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IRS demanding share of server's tips.....I had no idea.....this is AWFULL. [View all] clarice May 2015 OP

Its always been like that. bunnies May 2015 #1

No not always Egnever May 2015 #21

Which would make sense. bunnies May 2015 #23

I believe it all happened under reagun notadmblnd May 2015 #56

Not true. Ms. Yertle May 2015 #57

Eh? Tips are income. You're supposed to report income. Erich Bloodaxe BSN May 2015 #2

Yeah. How dare they collect so we can run the government yeoman6987 May 2015 #30

That's right. It is considered income. What does wages salaries and tips means? still_one May 2015 #60

Tips are income, so, yeah. The Velveteen Ocelot May 2015 #2

Guess I just didn't realize....from now on....tips in cash only. nt clarice May 2015 #5

Tips have to be reported if paid in cash, too. The Velveteen Ocelot May 2015 #7

Yeah, nickel and dime those at the bottom of the income tree rusty fender May 2015 #38

It is definitely bullshit. The Velveteen Ocelot May 2015 #59

No, everyone in cash jobs gets a pass. former9thward May 2015 #40

Not necessarily so. The IRS is more likely to audit lower-income people The Velveteen Ocelot May 2015 #61

I agree that they should be gifts. former9thward May 2015 #63

Technically correct, but guess what... Adrahil May 2015 #48

just be sure to tip ENOUGH ProdigalJunkMail May 2015 #8

You got it bottomofthehill May 2015 #29

servers should report their tips CreekDog May 2015 #14

If there IS such a thing when they retire. nt clarice May 2015 #15

it also calculates into disability benefits should they ever need anything. CreekDog May 2015 #17

True dat !!! nt clarice May 2015 #18

Yeah, who does the IRS think they are. Collecting income taxes on income. Those bastards. Travis_0004 May 2015 #55

Tips are income and most go unreported. MohRokTah May 2015 #4

Maybe you should be upset about their low wages. Kingofalldems May 2015 #6

Those BLASTED business owners !!!!!! nt clarice May 2015 #16

Start an OP on that yeoman6987 May 2015 #31

I'll post whatever I want. Kingofalldems May 2015 #50

Tips are income. The IRS has always taxed tips as income. MineralMan May 2015 #9

They started taxing tips fredamae May 2015 #10

Started in the 80s* under reagan. (update4) See crabby's post #24 Cerridwen May 2015 #11

Seems to me 1939 May 2015 #12

See the excerpt and link below. The Senate however, had just flipped to repub. Cerridwen May 2015 #22

Unfortunately, after 1980 Art_from_Ark May 2015 #44

Income tax on tips predates Reagan Crabby Appleton May 2015 #24

Thanks, crabby for the corrections and sources. Cerridwen May 2015 #68

Simply not true Ms. Yertle May 2015 #58

See updated post. n/t Cerridwen May 2015 #69

thanks to all, guess it's been around for quite a while........ clarice May 2015 #13

Tips have not always been taxed. SheilaT May 2015 #19

Thanks Sheila....great post. nt clarice May 2015 #20

The tips were supposed to be reported as income. What has changed is that the law now provides Gormy Cuss May 2015 #28

tips have always been subject to tax jcboon May 2015 #25

I wonder if the Dancers at clubs report their tips. (I know they're supposed to but...) BlueJazz May 2015 #26

Do what I do with my hairdresser... MrMickeysMom May 2015 #27

Why? They will get less Social Security and yeoman6987 May 2015 #32

I think the proportional difference of what is taken from payroll can't beat day to day needs... MrMickeysMom May 2015 #35

I know in general you are right yeoman6987 May 2015 #54

then when they collect social security, they get even less...because of income was never reported Skittles May 2015 #34

I totally agree what the real issue is, Skittles... MrMickeysMom May 2015 #36

This message was self-deleted by its author bhikkhu May 2015 #41

It's income...small bits at a time but it adds up, Demonaut May 2015 #33

Oh my God!! Income being taxed?!?! TYRANNY!!!! TransitJohn May 2015 #37

California law requires servers get minimum wage , the rest of the country should do the same JI7 May 2015 #39

All 50 states have a minimum wage for servers. former9thward May 2015 #42

isn't that only if they don't get tips that comes out to minimum ? JI7 May 2015 #43

Five states have no miminum wage law. Gormy Cuss May 2015 #49

States such as CA and Oregon require tipped employees to be paid regular minimum wage in Bluenorthwest May 2015 #53

Wisconsin is $2.33 an hour for servers. Servers who have to do side work with no customers myrna minx May 2015 #62

Then they have to pay the regular minimum wage former9thward May 2015 #64

Your assertion does not reflect the reality- Mother Jones - 5/12/14 Minimum Wage Loophole That's Screwing Over myrna minx May 2015 #67

On kind of a side note davidpdx May 2015 #45

I had to report tips and pay taxes on them even in 1965, when I was earning tblue37 May 2015 #46

irs stinks, but... Zippyjuan May 2015 #47

Uh... sendero May 2015 #51

This ^^^ Algernon Moncrieff May 2015 #66

Another UNCHECKED entity that the forefathers would have orpupilofnature57 May 2015 #52

If you tip using a cedit card, the server reports the actual tip (and is withheld accordingly) Algernon Moncrieff May 2015 #65