The IRS should stay out of tips

[crashhelmet]

When I was a bartender, I had tips reported in one of 2 ways. Both are approved by the IRS. There was also a third I was told that another casino used for their employees.

1) Write down and report your actual tips every day into a log book.

Exactly what it says. If we didn't record our tips, we didn't get our paychecks. They would not process payroll for us if they did not have the necessary information. I know of some people reporting less than they made. Some people would report more than they did from time to time to balance it all out. For example, they might make $700 in tips one night from a gambler hitting a jackpot or two, but only report $300. The next night, they might report $200 instead of $120.

2) Taxed on 8% of our total sales and comps.

Everything that got rung up on our registers in my name was totaled. They then reported whatever 8% of that number was is what I made in tips. More often than not, I made more than the 8% entailed, but there were sometimes that I made less. Usually a graveyard or banquet shift.

3) Set amount per shift.
The casino my SiL works for reports to the IRS a taxable amount of $90 per shift. She makes more than that, but the IRS accepts it without any problems. The only thing that sucks about that is their graveyard shift doesn't always make that much. I was told they're trying to go with an "either or" policy, but I haven't heard anything more about it.

I've got no problem with paying taxes for the tips I make. I've got no problem with paying taxes at all. I only wish the tax money was better spent.

CH

[Tanasi]

All incomes earned or unearned is subject to income taxes. There are exceptions but most of those require you to earn the income in a foreign local while risking your life (aka hazardous duty pay.) Even ill-gotten gains are subject to income taxes that's how they put Al Capone in prison.

Employers are required by law to give the employee an opportunity to report any cash tips the employee received. The employer by law must report all monies intended for the employee to the IRS and other govermental revenue services. The employer only has to report what they can prove. If a tip is left via a credit card then the employer must report said tip regardless of when the employee receives the tip (either then or on their pay-check.) Any income exempting hourly wages and tips (freely given) that is charged by the employer to customers that is later distributed to the employees (such as service fees, delivery fees) can effect the employee's hourly overtime premium. Overtime is not always time and a half especially in the service areas. I won't go into specifics as it's highly technical but I know this for a fact as I've written more one payroll and time and attendence software packages.

If you do not report all income as required by law then by definition you're a crook, not doing your part and not pulling your weight. Just because others do so is no excuse for you to do so. I don't like it anymore than you do but it's the law I've agreed to live under.

A big part of my job it to make sure the customer's employees are correctly paid according to the laws of federal, state and local governments.