[VApeople]

Originally Posted by Two Bills

I remember sitting with my wife in the old Sonrise Cafe

Yeah, we loved the Sonrise Cafe but, to be honest, we love Darrell's even more.

We stopped there today for a delicious breakfast. It was $23 and we gave her $35 to include a tip. Then we went to a few stores, finished off at Fresh Market, and drove back home. Life is good.

[retiredguy123]

Originally Posted by Rainger99

For a party of 6 or more with a mandatory service fee of 18%, are you supposed to tip on top of that? And do you tip on the 18%?

So for a $500 bill plus a $90 service fee, should you tip $75 (15% of $500) or $88.50 (15% of $590)?

And if the restaurant called it an 18% gratuity fee instead of a service fee, would that make a difference?

To further clarify large group mandatory charges, this is a quote directly from the IRS.gov website:

"Charges added to a customer's check, such as for large parties, by your employer and distributed to you should not be added to your daily tip record. These additional charges your employer adds to a customer's bill do not constitute tips as they are service charges. These service charges are non-tip wages and are subject to social security tax, Medicare tax, and federal income tax withholding."

[Rainger99]

Originally Posted by retiredguy123

To further clarify large group mandatory charges, this is a quote directly from the IRS.gov website:
"Charges added to a customer's check and distributed to you should not be added to your daily tip record. These service charges are non-tip wages and are subject to social security tax, Medicare tax, and federal income tax withholding."

If the waiter gets the service charge, why would you also tip them? Seems like a way to pay them twice.

[retiredguy123]

Originally Posted by Rainger99

If the waiter gets the service charge, why would you also tip them? Seems like a way to pay them twice.

Agree. I wouldn't tip them. Also, I avoid restaurants that charge a mandatory "gratuity" for large groups. To me, it's insulting. At least the IRS recognizes that a mandatory gratuity is not a tip.

[ThirdOfFive]

Originally Posted by fdpaq0580

Guess I'm another exceptional individual. Be polite. Be quietly efficient. Serve the meal with the least amount of interrupting as possible. (This is a date and you weren't invited to join us Becky). If you are going to refill our coffee or drinks we shouldn't even know you were here. They should appear as if by magic.
To me, once the order has been taken, the less I actually have to speak with the server about needing/wanting this or that, the better. The meal should flow as if from a wellspring, without hiccups or sputtering. A meal catered by a genie. That, to me is exceptional service. Do NOT call me Hon.

How much of the difference in how tipping (and service) is seen can be attributed to cultural differences based on where people in TV come from? It is a melting pot after all.

I recall my first experience here with that cultural difference. My wife and I stopped at Cracker Barrel for lunch. Quite a few people hanging around the reception area. I asked the hostess how long the wait was going to be. Her response (as she put an arm around me): "why it's not gonna be that long at all, honey!" Never see that in Minnesota. It caught me off guard but at the same time brought a big smile to my face. What a uniquely southern way of putting people at ease!

Same with some of the other examples mentioned here. Southern Minnesota, where I lived and worked, is a primarily rural setting. Numerous small towns divided by large stretches of corn and beans: 200 mile days visiting clients were not unusual. You got to know the waitstaff in the eateries you frequented and they got to know you. Just the way things are done there; anyone who would rebuff a friendly greeting or inquiry would be seen in a not-too-favorable light. The other side of that particular coin is that, in my experience, there are parts of this country where the locals are not so laid-back; larger cities and parts of the eastern U.S. where people are a lot more private and closed-off and where any unsolicited expression of familiarity is viewed with suspicion.

There are no absolutes regarding this particular topic. What is acceptable to someone is NOT acceptable to someone else. Simple as that.

[fdpaq0580]

Originally Posted by ThirdOfFive

There are no absolutes regarding this particular topic. What is acceptable to someone is NOT acceptable to someone else. Simple as that.

Truth!

[OrangeBlossomBaby]

Originally Posted by retiredguy123

Agree. I wouldn't tip them. Also, I avoid restaurants that charge a mandatory "gratuity" for large groups. To me, it's insulting. At least the IRS recognizes that a mandatory gratuity is not a tip.

I'm okay with a restaurant adding 15% to the bill for large parties. This is why: there are times, when a large party will have a dedicated server. That server doesn't serve any other table while that party is there, because the server already has 20 customers and really just shouldn't be expected to manage more if there are other servers on the shift.

If that table's host says "please give me the bill, I'm taking care of it" and he stiffs the server, then that server has just spent the last hour-plus working his butt off for less than minimum wage, and ZERO opportunity to earn a dime from any other customer for that hour.

My grandparents always undertipped - they put $1 on the table, no matter how large or small the bill. They decided that $1 was quite enough, the server should "just get a better job" if they want to earn more than that. Because they assumed that it was -that- easy for everyone to "just get a better job." So my sister and I always snuck a few bucks extra to the server after the grands went toward the exit of the restaurant. We estimated, since the grands wouldn't let us see the bill. Often there were 14 people: grands, my parents, my mom's two sisters and their spouses, and all the grandkids. I was the oldest grandkid and since I was working, it was no big deal to me to toss in a five or a ten a few times a year to ensure that the server wouldn't be utterly miserable after dealing with our family drama for an hour (just somewhat miserable, but hey - that's the customer service business for ya).

This kind of thing does happen. Not often, but often enough to cause a server to walk out on the job. Employers who understand this, will make sure that the larger parties are guaranteed to kick in at least the minimum gratuity. Customers can always top it off if the service was remarkably awesome, but generally no more than 5% of the pre-gratuity, pre-tax bill.

[mraines]

Originally Posted by Michael G.

Do waitresses in restaurant's around TV share their tips?

I need to do more research on this, but I have been asking around as it differs in different establishments. I have found that some do, some don't. I have also found that if you put the tip on a credit card, it goes on their paycheck and therefore is taxed. I need more clarification. I don't know if dishwashers and cooks make minimum wage, but they should. They all should make minimum wage and not have to rely on tips. There does not seem to be a uniform way of distributing tips.

[Michael 61]

This thread has made me think about how I tip - I’m now considering to start tipping in cash and handing it directly to the waiter/waitress.

[retiredguy123]

Originally Posted by mraines

I need to do more research on this, but I have been asking around as it differs in different establishments. I have found that some do, some don't. I have also found that if you put the tip on a credit card, it goes on their paycheck and therefore is taxed. I need more clarification. I don't know if dishwashers and cooks make minimum wage, but they should. They all should make minimum wage and not have to rely on tips. There does not seem to be a uniform way of distributing tips.

If it is done correctly, a tip placed on a credit card should not go into the server's paycheck. It should be paid directly to the server and not taxed. The server only pays tax on their tips based on the "allocated" tip amount that appears in Box 8 of their W-2 form.

[BobnBev]

Originally Posted by Michael 61

This thread has made me think about how I tip - I’m now considering to start tipping in cash and handing it directly to the waiter/waitress.

That's what I do. They appreciate it.

[Bill14564]

Originally Posted by retiredguy123

If it is done correctly, a tip placed on a credit card should not go into the server's paycheck. It should be paid directly to the server and not taxed. The server only pays tax on their tips based on the "allocated" tip amount that appears in Box 8 of their W-2 form.

Not exactly.

All tips received by the server should be reported by the server to the employer, taxed as wages, and included on the W-2. It might be that tips on credit cards are automatically considered to be reported without any other action of the employee but I haven't looked into that. All tips *should* be reported and taxed but that doesn't always happen.

Allocated tips on the W-2 are something different. Allocated tips are based on 8% (usually) of a restaurant's gross receipts. The total amount is allocated to each tipped employee based on an IRS formula. The allocated amount on the W-2 is the difference between their reported amount and their portion of the 8%. The employee has the choice to pay taxes on their allocated amount or to provide evidence that they did not receive that amount.

IRS: Tip Recordkeeping & Reporting

[Keefelane66]

Tips are calculated and taxed as SSI, Medicare, and unemployment calculations.
Imagine work g your whole life as a server and one reaches retirement-age calculations based on wages without significant savings 401k, Keogh possible retirement benefits. SSI payment for 2023 is the same nationwide. It is: —$914 for one person.
Unemployment in Florida To calculate your weekly benefit amount, use the quarter in the base period with your highest earnings and divide the earnings by 26. This number is your weekly benefit amount. The minimum weekly benefit amount is $32 and the maximum weekly benefit amount is $275.so it is important to account for all wages. You can receive benefits for anywhere between 12 and 23 weeks depending on Florida's current unemployment rate. Benefits will vary for each claimant and will be based on earnings from your base period. Your base period is based on the first four completed quarters within the past 18 months. No one is getting rich from not working.

[retiredguy123]

Originally Posted by Bill14564

Not exactly.

All tips received by the server should be reported by the server to the employer, taxed as wages, and included on the W-2. It might be that tips on credit cards are automatically considered to be reported without any other action of the employee but I haven't looked into that. All tips *should* be reported and taxed but that doesn't always happen.

Allocated tips on the W-2 are something different. Allocated tips are based on 8% (usually) of a restaurant's gross receipts. The total amount is allocated to each tipped employee based on an IRS formula. The allocated amount on the W-2 is the difference between their reported amount and their portion of the 8%. The employee has the choice to pay taxes on their allocated amount or to provide evidence that they did not receive that amount.

IRS: Tip Recordkeeping & Reporting

While technically correct, I suspect that there is a lot of underreporting of tips to the employers, and the employers rely mostly on the allocated tip calculation to report tip income. Note that the allocated tip amount on the W-2 is added to the total wages and is therefore taxed for the FICA taxes.

[Bill14564]

Originally Posted by retiredguy123

While technically correct, I suspect that there is a lot of underreporting of tips to the employers, and the employers rely mostly on the allocated tip calculation to report tip income. Note that the allocated tip amount on the W-2 is added to the total wages and is therefore taxed for the FICA taxes.

Am I misreading the document I linked?

If your employer allocated tips to you, then the allocated tips are shown separately in Box 8 of your Form W-2, Wage and Tax Statement. They are not included in Box 1 (Wages, tips, other compensation), Box 5 (Medicare wages and tips), or Box 7 (Social security tips) of your Form W-2.

Generally, you must report the tips allocated to you by your employer on your income tax return. Attach Form 4137, Social Security and Medicare Tax on Unreported Tip Income, to Form 1040, U.S. Individual Income Tax Return, or Form 1040-SR, U.S. Tax Return for Seniors, to report tips allocated by your employer (in Box 8 of Form W-2).

(emphasis added)