Quote:
Originally Posted by retiredguy123
I understand the rule, but the IRS has a special tax rule for tipped employees. They are only required to pay income tax on 8 percent of the gross income of the business as pro-rated by the employer on the W-2. I am not sure how the IRS views this situation, but I think the tipped employees may no longer be eligible for the 8 percent rule. Also, how would the employer report the pooled tip income received by the non-tipped employees, who are not eligible for the 8 percent rule? It sounds like the tipped employees may lose their special status as tipped employees. Very confusing. As a restaurant server, I don't think I would work for an employer who shared my tip income with non-tipped employees.
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Tip sharing, from a tax stand point is a nightmare. From a business stand point is a basket of worms. From a personal stand point can create hard feelings and animosity among co-workers. From a customer stand point, it bothers me that my gift to the one person that most impacted my dining experience may be robbed of some, if not all of the gift meant for that individual. Tipping, as practiced, is an onerous and odious way of getting service workers properly compensated for their work.