Night Elf Posted January 14, 2013 Share Posted January 14, 2013 Dd20 works as a restaurant server. They do not generally work from cash registers and simply hold all cash until when she checks out to leave work. Transactions paid by credit card are put into the computer as soon as the order is placed, then again when the transaction is complete and the tip written in. Therefore, the computer is recording all of her tips, except the ones she got in cash. She was told to consider that bonus tips, which is not right of course. During checkout, the computer will know how much cash she has in her book (not tips) because the bill was calculated to give to the patrons. So those cash sales and credit card sales are added and her tips are 18% of that. She may take home those tips but if the tips were less than the cash she has in her book, she has to turn in the difference. On days when she had no cash sales, the restaurant owes her her tip money because she has no cash in her book. It all sounds so confusing! She gets paid $2.13/hr and they take taxes out of that amount. Is it likely they are calculating taxes on the tips when she checks out? I imagine if she earned $100 in tips, they would have her take less home because they are taking taxes out. She has no clue though. If they aren't taking taxes from that money, it seems like she's going to be hit with a huge tax bill once her wages/tips/earnings are reported. If they show her taking in $100 tips but there is no record of it being taxed, it will be taxed on her 1040EZ form. Is this as bad as it sounds? What can she start doing now to avoid having to owe again next year? Goodness I hope this makes sense. Quote Link to comment Share on other sites More sharing options...
reign Posted January 14, 2013 Share Posted January 14, 2013 At the end of her shift she should be claiming her tips most servers claim as little as possible. Basically evening out at 12% of totally sales. The restaurant then takes her taxes from her pay check. I have actually owed money on paychecks and it got taken from the following check. If she needs help could you look at her paycheck with her? Also I have always been advised to claim some cash tips. It looks obvious that you are scamming if you only get tipped on credit cards. Quote Link to comment Share on other sites More sharing options...
Night Elf Posted January 14, 2013 Author Share Posted January 14, 2013 At the end of her shift she should be claiming her tips most servers claim as little as possible. Basically evening out at 12% of totally sales. The restaurant then takes her taxes from her pay check. I have actually owed money on paychecks and it got taken from the following check. She doesn't get a paycheck that includes tips. She gets the days tips in cash at the end of each shift that the computer calculates. The small hourly wage she receives is put onto a debit card. Taxes are taken out and she rarely gets more than $5 for a pay period. I've been wondering if the computer is taking taxes out of the total tips or if the restaurant is not taxing the tips, which would be a problem. Her coworker owed $1000 last year and that is scaring my dd. Quote Link to comment Share on other sites More sharing options...
EducationX2 Posted January 14, 2013 Share Posted January 14, 2013 When she clocks out, does she have to enter how many tips she's made that day? When I was working in restaurants, the computer automatically calculated a certain percent of our cash sales. When we went to clock out, that amount would come up on the screen and we could either accept it or change it to enter a different amount. In the other restaurant I worked in it would tell us our total cash sales and we could figure out on our own how much to enter. If the computer does anything like that, she should be fine. Has she asked a manager about how their system works? That may be the best way to make sure she's not owing taxes next year. Quote Link to comment Share on other sites More sharing options...
Melissa in Australia Posted January 14, 2013 Share Posted January 14, 2013 what a confusing system! Is the minimum wage in America really only $2.13 hr? WOW! Quote Link to comment Share on other sites More sharing options...
reign Posted January 14, 2013 Share Posted January 14, 2013 When she clocks out, does she have to enter how many tips she's made that day? When I was working in restaurants, the computer automatically calculated a certain percent of our cash sales. When we went to clock out, that amount would come up on the screen and we could either accept it or change it to enter a different amount. In the other restaurant I worked in it would tell us our total cash sales and we could figure out on our own how much to enter. If the computer does anything like that, she should be fine. Has she asked a manager about how their system works? That may be the best way to make sure she's not owing taxes next year. This is worded much better than my post. The taxes for her tips should be coming from her pay check. Getting a debit card instead of a check seems odd. At the restaurants I have worked at the check has all tax and hourly information. It would list hours worked, sales, tips, and taxes. I'd have her talk to management just to clear things up. The only times I've heard of servers owing so much back taxes were extreme cases. Someone not claiming tips then getting audited and someone else who didn't file for several years. Quote Link to comment Share on other sites More sharing options...
anotherbrother Posted January 14, 2013 Share Posted January 14, 2013 It seems mathematically impossible that they're not taking taxes from her tips. If they were only taking taxes from her wages, and her wages are $2.13/hr, she would be paying a very small percentage in taxes. If she work ten hours, earning $21.30, even 20 percent in taxes would leave her with $17.04. Has she asked for a pay stub? She should receive one after every pay period. That would tell her the exact amount she is paying taxes on. ETA: It will also be stated on her W-2 that she should receive by January 31st. Quote Link to comment Share on other sites More sharing options...
misty.warden Posted January 14, 2013 Share Posted January 14, 2013 When I worked in Texas and counted tips as wages we wrote in the daily tip amount on our timesheets and the bookkeeper added that to the credit card tips from the computer. Paystubs showed the total wages+tips and taxed amount and it was from both. If you're worried she'll owe (and with low wage jobs unless the withholding is really weird that is pretty rare) I'd take the W2 to H&R Block or something similar and have them look at it. what a confusing system! Is the minimum wage in America really only $2.13 hr? WOW! Federal minimum is more like $6.00 and individual states can set theirs higher, but workers who get tips usually get paid much less by their bosses because they have to count tips as wages. In that case, if your tips + base wage don't average out to the federal minimum your boss has to make up the difference at the end of the pay period (some states don't do that and pay full minimum wage and tips are counted differently). Quote Link to comment Share on other sites More sharing options...
Melissa in Australia Posted January 14, 2013 Share Posted January 14, 2013 When I worked in Texas and counted tips as wages we wrote in the daily tip amount on our timesheets and the bookkeeper added that to the credit card tips from the computer. Paystubs showed the total wages+tips and taxed amount and it was from both. If you're worried she'll owe (and with low wage jobs unless the withholding is really weird that is pretty rare) I'd take the W2 to H&R Block or something similar and have them look at it. Federal minimum is more like $6.00 and individual states can set theirs higher, but workers who get tips usually get paid much less by their bosses because they have to count tips as wages. In that case, if your tips + base wage don't average out to the federal minimum your boss has to make up the difference at the end of the pay period (some states don't do that and pay full minimum wage and tips are counted differently). Thanks for explaining. I think I prefer the Aus system where the employee is paid a minimum wage and people only tip if they received exceptional service. Quote Link to comment Share on other sites More sharing options...
Night Elf Posted January 14, 2013 Author Share Posted January 14, 2013 When she clocks out, does she have to enter how many tips she's made that day? No, isn't that weird? She said the computer does it all. She's not the only one who finds the system confusing. She did ask one of the managers but he said it was all taken care of and she shouldn't worry. Good grief. Perhaps she is misunderstanding and they are taking taxes out of her tips each day, like if she made $100 in tips, they only give her $80 or something like that? Last night when we were talking, she said something about the debit card account got changed and she wasn't aware of it. She makes so little that goes on the card that she doesn't even check it every month. The manager told the employees they were getting two W-2's because the pay system had changed and that was how she found out. I'm going to ask her to show me what the online account looks like. Maybe there is more information on there than she realizes, like something similar to a paycheck stub. Quote Link to comment Share on other sites More sharing options...
Tree Frog Posted January 14, 2013 Share Posted January 14, 2013 She's not the only one who finds the system confusing. She did ask one of the managers but he said it was all taken care of and she shouldn't worry. I'm not familiar at all with restaurant servers' salaries, but if I had a manager who told me not to worry because it was all taken care of, it would raise big red flags to me. (Besides the fact I don't like people to speak condescendingly to me! They're my finances and I need to understand them.) The manager isn't the one who will be on the line should there be a problem; it will be your daughter's problem and she might not have any recourse should there be problems. Of course, when I was a teen, I probably would not have pursued the issue, but as an adult (with a daughter who could be in the same boat sometime soon), I would be telling my dd what kinds of questions to be asking the manager and what kinds of answers she should expect. Quote Link to comment Share on other sites More sharing options...
QueenCat Posted January 14, 2013 Share Posted January 14, 2013 When I waitressed, the taxes were taken out of the paycheck, not my daily cash tips. However, the taxes taken out were based on a percentage of sales. We did not report our actual tips to the restaurant, as they just used a formula to determine how much taxes to take out of the check. Paychecks were usually next to nothing as the taxes were based on presumed tips, not the hourly wage. It was this way in every restaurant that I worked in. Quote Link to comment Share on other sites More sharing options...
Ohdanigirl Posted January 14, 2013 Share Posted January 14, 2013 If the computer is really calculating 18% tips, then the taxes would be taken out of her check. That would be why her checks are so small. If this other server owed money, it is either because the systme isn' really calculating the 18%, and this server had allocated tips. (I'll explain below) Or she made a lot of money for the amount of deductions she had. The above post explains it well. The check is taxed based on PRESUMED tips. When your dd gets her W2, check to see if there are allocated tips listed. If so, this means that the amount of tips reported by the system is not the amount the federal government presumes she has made. In that case, the system is not reporting any where near 18%. They may be giving her the 18%, but not reporting it. If she does not have allocated tips and ends up owing, then it is because of her deductions. Basically she is bumped into a higher tax bracket. I hope that makes sense. Quote Link to comment Share on other sites More sharing options...
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