Quote:
Originally Posted by Bill14564
I thought the question was about how the suggested tip was calculated.
If my purchases total $100 I would be charged $7 in tax for a total of $107. Is the suggested 20% tip calculated to be:
- $20 because it is based on the pre-tax amount?
- $21.40 because it is based on the post-tax amount?
I have seen both.
Note: Neither of those affect the amount of tax paid to the State (and County). That amount is calculated on the $100 sales total regardless of how the machine calculates the suggested tip.
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Not the way I read the post. I think the poster wanted to know if they were being charged sales tax on the tip amount, and, thereby, giving money to the Government that was not owed.
Sales tax does not apply to tip income as long as the tip is completely voluntary. If the tip is mandatory, then sales tax does apply.