During the last Presidential campaign, Trump proposed a new law that would exclude tips ( some people call them 'gratuities') from being taxed as income. Not too long after that, Kamala said nearly the same thing, but for different reasons. Trump's philosophy is that tips are gifts, and as such should not be taxed. They are a gift from a client to a server for a service remdered properly. I agree completely, but the IRS does not. According to the IRS:
People who work in restaurants, salons, hotels and similar industries often receive tips for the customer service they provide. Tips can be taxable income, but it's important for people working in these areas to understand important details involving tips.
What are tips according to the tax man? From the IRS:
Tips are optional cash or noncash payments that customers make to employees. Cash tips include: those received directly from customers, electronically paid tips distributed to the employee by their employer and tips received from other employees under any tip-sharing arrangement. All cash tips must be reported to the employer.
Noncash tips are those of value received in any other medium than cash, such as: tickets, passes or other goods or commodities that a customer gives the employee. Noncash tips aren't reported to the employer.
Four factors determine whether a payment qualifies as a tip. Normally, all four must apply:
The customer makes the payment free from compulsion;
The customer must have the unrestricted right to determine the amount;
The payment should not be the subject of negotiations or dictated by employer policy;
and Generally, the customer has the right to determine who receives the payment.
I call bullshit.
When a kid has a birthday, or their First Communion or Confirmation, or a couple gets married, those envelopes have cash in them. If they're not required to report that as income, why should tips be taxed? It's the same thing.
Go ahead - try and convince me otherwise...
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When I tip someone, that is for them, not the stinking government to waste.
ReplyDeleteThe strippers union is totally behind this action.
ReplyDeleteI always give cash to the person. screw the damn IRS. just like people that do some work on the house I am unable to do myself. if THEY want to report it to the damn IRS, well. that is up to them. I had enough of the damn IRS digging into my pocket over the years. I gotten screwed over by them too many times in the past over bullshit.
ReplyDeleteand yet, there are a ton of assholes who skate on what they owe every day.
1. I agree 100% that tips should not be taxed.
ReplyDelete2. Some restaurants have a "mandatory" 18% tip for groups larger than 8 (get people in large groups and they forget their manners). Even though the 18% is mandatory, it should be taxed free.
I agree with you on the taxing overtime issue. It's pay for work; therefore it should be taxed (although; I hate paying taxes). Also, tax on tips....eerr....hm....if its on a credit or debit card but not on cash. (how many folks do a handyman job and get paid in cash; and don't pay taxes on that) No taxes on social security....boy howdy, now you got my attention! Talk about double taxation; that's all taxes on my retirement money is; double taxation.
ReplyDeleteIn my experience some of the best tippers are people who are, or have been, employed as waitresses, bartenders etc.
ReplyDeleteWhen I tip it is with money I earned that has already been taxed. Then the person I tipped must pay more taxes on the same money. Then they use that money to tip someone else who pays even more taxes on the same money (or more precisely , what is left of it). And so it goes on and on and on until somewhere down the line the feral government has taken as taxes 100% of the original earned income that I used as tip money.
I believe the tax on gifts of cash kick in around $14K and is supposed to be paid by the donor. I can’t see the substantive difference between a tip and a cash gift.
ReplyDelete