Originally Posted by
cepheid
A 5-second search for "tips" on
www.irs.gov reveals this page, among many others:
http://www.irs.gov/taxtopics/tc761.html
It's usually helpful to go to the source when asking such specific questions, rather than asking a nebulous population for anecdotes. The IRS website actually has many "user-friendly" pages that explain certain aspects of the tax code in layman's terms fairly well.
I appreciate the link.
It is not only legal, it is law - as in, it's not just allowed, it's required. The reason few people complain is that allocated tips are only 8%, while average actual tips are generally much higher... unless, of course, a large fraction of customers decide to stop tipping.
What other industries can one's income be guessed upon by the IRS simply by using an arbitrary percentage? In this case, the federal gov't is losing money. If they one day wake up to that fact and then increase the percentage to one in which people are then being
overtaxed by that same assumption of a percentage, then trial lawyers will get involved saying that people cannot be taxed on an assumption of income when in fact their real income is LESS than the assumption.
Originally Posted by planemechanic
You don't push for a system to change by participating in that system. Avoiding eating out also defeats the effort to change the system. I eat out all the time.
Your first sentence says that you don't push for change in a system by participating in that system. Ok. Since you DO want change, why are you then not following your own advice? Why are you participating in that system? Is your joy of eating out more important than upholding your ideal as you stated in your first sentence? Say one thing but do the other?