Quote:
Originally Posted by chipj29
Every employee of every company is required to pay taxes based on their income. Servers at restaurants who receive a cash tip are no different.
The difference you are talking about is what the servers claim as income.
-If a customer gives them a cash tip, the IRS requires them to claim 100% of that. Some do, some don't. But that is the law.
-If a customer gives a credit card tip, there is documented proof of income, so it really has to be claimed.
The IRS knows approximately what a server makes in tips based on their sales. So if a server is not claiming 100% of their tips (cash or credit), chances are the IRS can figure it out fairly easily.
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I missed this. The point is that most servers will never be anywhere near the 39% tax bracket. Taking more than they owe is wrong.