Re:Restaurant workers quit at record rate
by _delirium on Tuesday July 20, 2021 @03:51PM
(#27898412)
> most workers do not fully report all of their tips, which saves them both income and payroll taxes
I wonder what percentage of tips are still cash tips, which is the only case where you can get away with that. I imagine the percentage of tips that are on a credit card (or even app like Doordash/Seamless) vs. cash has been increasing over time, but I can't find solid numbers.
Most credit and debit card tips are paid out to servers with cash from the register at the end of the day. The amount of the tips is recorded, but the recipients are not, and taxes are not assessed against the tips. Technically, servers are supposed to declare the cash they receive as income, but it is accepted practice not to do so.
I'm not sure about that. It's been thirty years since I waited tables, but our restaurant required us to turn in tips (they were pooled and distributed to everyone who worked that shift). The withheld taxes on them, and if we skimmed tips and didn't turn them into the pool at the end of our shift, we'd get ratted out by coworkers and fired.
Re:Restaurant workers quit at record rate
by mlonkibjuyhv on Tuesday July 20, 2021 @03:52PM
(#27898414)
They could probably save even more in taxes by never registering as a business in the first place!
FYI, one of the reasons restaurants don't do this is the tax impacts. When someone tips 20%, there is no sales tax assessed on the tip — the full 20% goes to the worker. If you increase prices by 20%, that is subject to a sales tax (roughly 10% where I live), which amounts to a 1%-2% increase in the total price.
On top of that, moving tips to wages results in more income and payroll taxes being taken out (most workers do not fully report all of their tips, which saves them both income and payroll taxes).
It might not seem like a lot — just a couple percent here and there — but restaurants have pretty thin margins.