I recall that servers can claim a 8 or 10% tip rate. Not sure if this rate is current or not, and I think restaurants are required to fill out more on the total tip amount.

No one EVER has to pay taxes on presumed tips as income. What servers complain about is not being able to hide as much income as they would like or what they used to be able to. The IRS From 4070A is for tracking of all tips and tip-outs to supporting staff. irs.gov/pub/irs-prior/f4070a--2005.pdf

I was in this business from roughly 1990 to 2005 and there were a lot of changes during that time. For years 8% was just an amount you could claim and the government was okay with that. Of course, the actual % is/was way more than that. Once credit cards came along, a "house average" was able to be computed (IRS assumed servers were roughly making the same % on their cash sales as their CC sales). Just to be clear, like everything with taxes and the IRS, your own records (on form 4070A) will be enough to substantiate your actual income. What happens in an audit if your self-reported average % is 6% and the house average is 16%? I guess you can try to sell the IRS on the fact that you're just a terrible server but I can't promise that will work out for you.

In the end, sorry servers but you have to pay taxes on your income like the rest of us. And please stop playing the, "I'm paying taxes on money I don't earn," card. It's just not true and it never has been. You can't hide income when it's convenient and then claim you're being over-taxed at other times.

Unless it's business related dining, I'll tip a token amount on my CC and the rest in cash. This isn't to make it easier for "tax efficiency," but rather a courtesy in case the server needed the cash that evening and to ensure the restaurant owner doesn't short change him/her.

RE: Server supply constrained

I'd wager this will worsen, as this morning's retail sales (excluding autos) is up higher than expected even with generally higher prices across the board. As more Americans return to their normal, relatively speaking, shopping habits restaurant demand should rise correspondingly. If they're not up to speed on staffing now, they ain't going to be.

We're probably going to see more of these signs and rising wages.

Given there is trouble with getting/retaining restaurant workers even at places where tipping isn’t a material part of the income picture, the issue with the server shortages is about way more than reliance on tip income and tax compliance with regard to tip income.

A lot of restaurant workers have learned to have a better quality of life with work that doesn’t involve the shift work and income insecurity that restaurant work involves, and so they are doing what rational actors in the labor market do: demand higher wages and/or better working/pay conditions or go with employment in other industries.

In some ways, restaurants would have been even worse off in some places in the US if the COVID-19 unemployment assistance wasn’t as much as it was, since even more of them would have already migrated to other industries and be less likely to look back at working in the F&B service world.

It's not just restaurants are trying to hire people. I see hiring signs everywhere now. Do you want to work minimum wage at a restaurant/fast food or minimum wage at a Bath and Body Works at the mall? There is a small Chinese restaurant near us that opened up in 2019. We used to go once a week to dine in. In 2020 they changed to order out only and only the cook (also the owner) remained working. Now that indoor dining is reopened, I ask if the owner will open indoor dining. He said it is easier this way and people are still buying takeouts. His reviews are based solely on the food and not the service. That is true as I look at the Yelp reviews for Chinese restaurants. A lot of the negative ones are based on services or how clean the place is.

Some of the fast food places near me switched to only curbside, carry-out, or drive-thru and haven't reopened the dining rooms for guests. They have lines that wrap around the buildings for drive-thru service, so I don't think the change hurt them.

Hm, interesting perspective, and one that hadn't occurred to me. If that's the case, then I hope we'll return to a free market where there's price discovery which will help restaurant owners determine the price that will support these higher wages. And, while I'm sure my view on this will be unpopular, if they can't operate profitably, they shouldn't be operating at all.

I can't recall if it was in this thread or another where I recounted tales of a few friends who worked in higher priced restaurants. Some were higher end establishments, and others were moderate to high price but high turnover, such as a famous local crab house. As they became senior servers, they appreciated the flexibility where they could work Friday night and Saturday night, plus maybe once during the week, and sometimes bring home several thousand dollars in a week. That 80k sounds about right, and in some places that's for less than 30 hours a week.

Someone on the Delta boards mentioned they were indeed trying to ramp up the number of phone CS reps after letting way too many people retire in 2020- $15 an hour, you can work from home after your six month probationary period, and full time and full benefits including travel. If you're already doing CS work at Walmart or Target, that sounds like an improvement in job quality, even if the pay isn't much different.

Read an article about McDonald's this morning. They're reporting that applications and hiring is recovering at a faster rate in states that ended the federal COVID subsidy early. That would be about the best evidence I've seen that the unemployment subsidy was a major cause of the labor shortage. Of course, I think we all agree at this point that it's not the only cause.

Local to me, lots of difficulty in recruiting with reports of advertisements for dishwashers at 50% above minimum wage (C$23/hr, when minimum is $15) in a region with very low unemployment. Seems young adults and teens prefer the side hustle of blogging instead of waiting tables or flipping burgers and avoid dealing with COVID-denying patrons..
.
https://www.timescolonist.com/news/l...try-1.24348731

Some restaurant I went to with my wife some half a decade ago now (frighteningly one of the better ones in that primarily retirement community) only offered counter service even back then. It's currently operating as take-out only as the outfit told neighbours who we recommended the place to that the kitchen can't be adequately staffed let alone counter service too: A food order some friends made last week was promised for 20 minutes to get ready but ended up taking well over an hour.

Probably mis-stated it but something to do with the difference between declared tip income and allocation on the W-2.

https://www.quora.com/What-percent-o...taurant-server

The whole premise of that question is the person trying to avoid paying taxes on some of their income. Restaurants can't allocate you money you don't earn and make you pay taxes on it. Despite any actions by the restaurant, a person's daily log of income should be adequate proof for the IRS (this is the reason the IRS came up with the publication in the first place). To reiterate what I said earlier, these questions always arise when servers want to hide income when it's convenient, then claim some unfairness when something starts eating into their, "winnings" ("winnings" being money they had previously hidden).

How I came across that notion of the IRS taxing servers on presumed income is some news article decades ago (mid '90s IIRC) re: tipping (or lack of) by Europeans and Australians primarily: The servers didn't mind that much that the clients didn't tip because it wasn't standard practise in their countries, but were more concerned that they'd have to pay tax on this missing tip. I only filed U.S. taxes for a few years so certainly didn't get any from tips so not familiar with exact U.S. tax filing practices. .The story stuck (at least for me) but I don't remember where I read it. Could have been the WSJ or a S.F. Bay area newspaper..

We stopped at Zoe’s Kitchen for lunch. It’s one of those restaurants where you place your order at the counter, pay and the food is brought to you when it’s ready, There was a sign on the door stating that they would close daily at 4:00 pm, for which they were sorry. No mention of a reason. They seemed adequately staffed at lunchtime (about 2:30).