Waitressing and tips

[Night Elf]

How does this work for taxes? Dd19 just got a part-time waitressing job. She's only making a couple of dollars per hour because the rest of the salary comes from tips. How does the restaurant keep up with that? Do they keep up with it? Do they put it on her W-2, or is she supposed to keep up with it herself?

[Desert Rat]

When I worked for tips 18-20 years ago, I declared my tips separately on a form similar to 1099. I made sure to set aside money to cover the taxes not taken out or I paid the consequences with a tax bill. This may not be helpful or relevant now though.

[beaners]

Every major chain I know of requires servers to record their cash tips and automatically records anything you receive from a credit card. Your tips would show up on your paystub and W2.

 

Small places might only record your credit card tips and require you to declare the rest, or they might just leave it all up to you.

 

It's a good idea to track it on your own no matter what, but I don't think most people actually follow through on that.

[reign]

Depends on the place. I have always worked for places where you claim your tips at the end of your shift. Then your pay check gets taxed. So my pay checks are very low usually under $5. Most servers will tell her to claim 10-12% of her total sales as her tips. The idea being she will get more money than that and not be taxed. Which ofcourse is illegal but almost universal.

[black_midori]

Depends on the place. I have always worked for places where you claim your tips at the end of your shift. Then your pay check gets taxed. So my pay checks are very low usually under $5. Most servers will tell her to claim 10-12% of her total sales as her tips. The idea being she will get more money than that and not be taxed. Which ofcourse is illegal but almost universal.

 

Many moons ago when I was a waitress (as a teenager), this was also standard practice. At that time, the restaurant basically put 10% of sales on your pay stub as tips & you paid tax on that. You were, of course, supposed to keep a separate log sheet that indicated if you made more or less than that & report it to them to add on to your W2... but usually it was just left as that. Generally you would never fight to report LESS than that, as that would indicate that you weren't a very good server... :D

[Dustybug]

Depends on the place. I have always worked for places where you claim your tips at the end of your shift. Then your pay check gets taxed. So my pay checks are very low usually under $5. Most servers will tell her to claim 10-12% of her total sales as her tips. The idea being she will get more money than that and not be taxed. Which ofcourse is illegal but almost universal.

 

This is how it was anywhere I have ever worked too. In fact every place that I was employed asked for you to input your tip amount in the computer when you clocked out.

[Night Elf]

I'm assuming they'll discuss this at orientation but I was curious. I've only had one job that had tips and I didn't report them because my salary wasn't dependent upon them. I ran a coffee cart at a local college and would go home with about $10 in tips. I figured that wasn't bad for a small junior college in a not-affluent area of town. :D

 

I found out last night that her pay is $2.50/hour. So we figure that as long as she gets at least $4.75 in tips in one hour, she'll be making minimum wage. She was offered a job at a retail store making minimum wage but chose the waitressing job because it would pay more with less hours hopefully. We'll see! She's only a couple of months away from graduating high school and hopes to start college this summer. I just hope she doesn't get distracted by the job like she did with her last job, which is what put her behind the graduation schedule in the first place!