Originally Posted by
davidhhh
And it is important to remember that taxes ARE calculated on presumed tips, at least in restaurants and bars.
Some of you might not think that it's necessary to tip, but it is actually expected, not just by the waiter or bartender, but by the US government.
The servers and bartenders are expected to declare tips, based on their sales, WHETHER OR NOT YOU TIP them. Depending on the situation, it's at least 8% of sales, but in many cases, it's expcected that the tip will be the average of what credit card tips (the only ones that can be verified) are. The IRS has gotten a lot more careful in how they look at tipped employees, and most now declare most or all of what they make. And with credit cards becoming the vast majority of sales in restaurants and more and more bars, tipped emplyees must actually declare all of their tips.
Whether or not you actually tip them, they will have to declare that you did, and pay taxes on it. That comes to about 1/3 of what you should have tipped, but didn't.
I'm late to this thread, but wanted to point out that this post is just plain wrong.
The US government requires you to declare ALL of your income, including all income from tips. If the IRS feels you are not declaring all of your income, they will audit you, and if you were not declaring all your income, you will be liable for fines, interest, and perhaps even face criminal tax evasion charges.
Now, the IRS doesn't know how much cash in tips you collect. But, if you declare what they think to be a very low amount of tips - under 8% of sales is one generally accepted threshold where the IRS will pay more attention - or significantly less than your credit card tips would indicate - the IRS is more likely to come audit you.
You are absolutely not, however, required to ever pay taxes on tips you didn't get. Just fill out your tax return accurately and you'll get a refund if you've had too much withheld.
Of course, if you are working as a waiter/bartender and you are averaging less than 8% of sales as tips, you almost certainly suck at your job and should consider a career change.