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(TaxProf)   30 year old's last wish: "leave an awesome tip (and I don't mean 25%. I mean $500 on a f***ing pizza) for a waiter or waitress." Of course, the IRS wants its slice   (taxprof.typepad.com) divider line 137
    More: Interesting, The Last Wish, Aaron Collins, Weekend Edition Sunday  
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13689 clicks; posted to Main » on 07 Jul 2013 at 12:44 PM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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ZAZ [TotalFark]
2013-07-07 10:20:51 AM
If one of my waitresses gets a $500 tip I make sure to report it to the IRS as a tip. The IRS assumes that restaurants with low tip receipts are cheating on taxes.
 
2013-07-07 10:28:44 AM
http://aaroncollins.org/   (Videos come with extra dust.)
 
2013-07-07 10:35:19 AM
Pithy comments:
1) something something death and taxes something.
2) There's no such thing as a free lunch, even if you're waiting tables at a pizza parlor

Serious comment:
If tip income wasn't such a huge share of total earnings, the IRS might be able to ignore it, but since it is, it would be granting an unfair advantage to a certain group of workers. Full-time wait staff are generally paid a living wage in Germany, for example, and tips are seldom more than 10% (and usually much less, like rounding up to the next euro and then adding a euro or two, depending on the amount of the bill). Tips are tax-free in Germany.
 
2013-07-07 10:39:58 AM
Just because it's a dying wish doesn't mean it's not subject to income taxes. The IRS doesn't have a sentimentality clause.
 
2013-07-07 10:44:48 AM
I know it is fun to be contrary on Fark, but are people really choosing the IRS over servers who make farking $2.00 an hour and live off what are often paltry tips? Seriously?
 
2013-07-07 10:51:23 AM
Most servers report credit card tips or 8%, whichever is most. If someone gives a cash tip of $500, the IRS should never know about it. Unless of course their bosses micro-manage their money or take their tips like Amy's Baking Company.
 
2013-07-07 10:54:20 AM
Sometime back in the 70s, I used to deliver news papers as a second job and the income was not taxed. Having a motor route (meaning, I mainly stayed in my car) I had a small gas allowance but the miles full of turns, lots of braking, the weight of several hundred papers caused a lot of wear and tear. I was forever tearing up front tires and having to replace brakes.

Then President Reagan pushed through a tax bill requiring paper carriers to file tax forms on their income. We managed to get around that by deducting everything from the cost of plastic paper bags, declaring our second cars for business use only, and even the tip cards we sent out on Christmas were considered advertising and deductible -- so long as we had the papers name included somewhere.

Plus, many customers would mail us a tip in cash. Which most paper carriers would fail to declare. Checks left a paper trail. Cash didn't.

If you're going to give the waiter or waitress a $500 tip, do it in cash. Don't make a publicity stunt over it. Most waiters do not report the majority of their cash tips anyhow, since there is no paper trail. Tips via credit card or check, however, leave a trail.

These days, with the debt so high thanks to the unmitigated greed of banks and the 1% during the housing boom, new taxes are popping up almost daily. I keep waiting for the homeless to start being taxed on the money they make panhandling, selling recyclables or doing the occasional low pay odd job.

I think it's great that so many people are contributing to the fund in the name of this guy, but so long as the fund is listed in his name and indicates what it's for, the IRS will watch the withdrawals.

Even if the executor puts the fund under a different name to protect the waiters and waitresses, the IRS will track him down through the information he gave to set up the fund, do an audit and demand he pay taxes on the monies collected.
It's kind of like our lotteries. Most were set up to benefit the schools with their proceeds -- but as soon as the millions started rolling in, the local governments started tapping into all that cash for everything else but education.

Plus, a winner has to pay up to 60% of their winnings in taxes, which the IRS makes sure comes right off the top before they get any cash. So, winning 100 million will cost you 60 million.

I've watched waiters and waitresses over the years and figure that the average one more than deserves whatever tips they get for all of the crap they have to go through and the usually low base pay they get.

I certainly couldn't do their jobs.
 
2013-07-07 10:55:16 AM
i1079.photobucket.com
"It's not tipping I believe in. It's overtipping."
 
2013-07-07 10:58:44 AM

cameroncrazy1984: Just because it's a dying wish doesn't mean it's not subject to income taxes. The IRS doesn't have a sentimentality clause.


This.  Plus what's an extra $500 in the tax bracket of most wait staff?  20 bucks more in taxes?
 
2013-07-07 11:05:17 AM

serpent_sky: I know it is fun to be contrary on Fark, but are people really choosing the IRS over servers who make farking $2.00 an hour and live off what are often paltry tips? Seriously?


Yep. Sorry, but that's the way it is. As I said, tax law doesn't have a sentimentality clause. If I win $500 on craps the day I go to the casino with my dying aunt, do I get a free pass too?
 
2013-07-07 11:09:55 AM
IRS aside, watching some of those videos I can only conclude that this concept is AWESOME.  Talk about brightening someone's farking day, and what a good way to memorialize someone.  Might have to get a copy of that book.
 
2013-07-07 11:10:23 AM
Except that's not what happened at all.  I know, welcome to Sunday.
 
2013-07-07 11:25:50 AM

cameroncrazy1984: Yep. Sorry, but that's the way it is. As I said, tax law doesn't have a sentimentality clause. If I win $500 on craps the day I go to the casino with my dying aunt, do I get a free pass too?


Actually yes.

Unless you get $10k in cash for a table games transaction the IRS isn't notified.  Granted at lower levels you start hitting tracking levels because you might aggregate to the $10k.

Hit a slot jackpot of $1,200 or better and you're going to be reported.

Now if you are a good American citizen you will report that $500 win on your taxes.  But there is no way the feds are ever going to find out about it from the casino.  Unless you have multiple transactions.
 
2013-07-07 11:27:19 AM
Of course it's income.  A gift is given in return for nothing.  A tip is given in return for service.

If the guy's will said, "Give $500 to a server  but don't order anything," that would be a gift.
 
2013-07-07 12:47:57 PM
hey if wishes were horses i'd be eating wish meat
 
2013-07-07 12:48:28 PM
I know a few bartenders who occasionally make $500 tips. It usually involves going to a hotel with a married regular, though.
 
2013-07-07 12:50:09 PM
All this is a tax professor using this real world example as a thought experiment for his tax class. This is what's called being a good teacher, sounds like a fun problem.

BarkingUnicorn: Of course it's income.  A gift is given in return for nothing.  A tip is given in return for service.

If the guy's will said, "Give $500 to a server  but don't order anything," that would be a gift.


Disagree. I think its a gift, not income. Income is something you earn in exchange for doing a service. The waiter here didn't actually earn this money for a service, but rather got this money because the giver wanted to be generous. I think you would argue that (500-0.15*bill size) is the amount of the gift, and the remainder is income.
 
2013-07-07 12:50:26 PM
OH GOD THIS ONE TIME I HAD A RUNNY NOSE AND A HEADACHE
SO I WAS DRIVING ON THE INTERSTATE AND I STILL HAD TO PAY A TOLL
FASCISM IN AMERICA
 
2013-07-07 12:51:03 PM

BizarreMan: cameroncrazy1984: Yep. Sorry, but that's the way it is. As I said, tax law doesn't have a sentimentality clause. If I win $500 on craps the day I go to the casino with my dying aunt, do I get a free pass too?

Actually yes.

Unless you get $10k in cash for a table games transaction the IRS isn't notified.  Granted at lower levels you start hitting tracking levels because you might aggregate to the $10k.

Hit a slot jackpot of $1,200 or better and you're going to be reported.

Now if you are a good American citizen you will report that $500 win on your taxes.  But there is no way the feds are ever going to find out about it from the casino.  Unless you have multiple transactions.


I think you undermined yourself. Winning $500 is legally taxable income. Whether or not its reported in practice is not relevant.
 
2013-07-07 12:51:50 PM
I love when people act like paying some tax on income invalidates it. If I'm a server, and someone leaves me a $500 tip, even if I "only" get to keep $350 or so of it after taxes, hell, that's $350 more than I had before.

I mean, Fox News ran a piece the day after Phil Mickelson blew the US Open talking about how he was lucky because he would have had to pay another $250K or so in tax on the more than $1 million additional prize money he would have gotten had he held on. I'm sure that cheered Phil right the fark up.
 
2013-07-07 12:52:28 PM
images.wikia.com
 
2013-07-07 12:54:35 PM

serpent_sky: I know it is fun to be contrary on Fark, but are people really choosing the IRS over servers who make farking $2.00 an hour and live off what are often paltry tips? Seriously?



To be fair, servers generally get healthy tips and don't report a good chunk of it, so end up getting paid more than someone who gets paid a decent salary/hourly wage. I think this what people take issue with the most./Had a coworker that got one of these $500 tips
 
2013-07-07 12:59:55 PM

cameroncrazy1984: serpent_sky: I know it is fun to be contrary on Fark, but are people really choosing the IRS over servers who make farking $2.00 an hour and live off what are often paltry tips? Seriously?

Yep. Sorry, but that's the way it is. As I said, tax law doesn't have a sentimentality clause. If I win $500 on craps the day I go to the casino with my dying aunt, do I get a free pass too?


You really need to pay people who know what they're doing to do your taxes. You haven't a clue, and this makes twice in one thread that you've been wrong.
 
2013-07-07 01:04:08 PM

cameroncrazy1984: Just because it's a dying wish doesn't mean it's not subject to income taxes. The IRS doesn't have a sentimentality clause.


The sentimentality clause, btw:
http://www.gpo.gov/fdsys/granule/USCODE-2011-title26/USCODE-2011-tit le 26-subtitleA-chap1-subchapB-partIII-sec102/content-detail.html

cameroncrazy1984: Yep. Sorry, but that's the way it is. As I said, tax law doesn't have a sentimentality clause. If I win $500 on craps the day I go to the casino with my dying aunt, do I get a free pass too?


The free gambling pass:
http://www.irs.gov/instructions/iw2g/ar02.html
 
2013-07-07 01:07:55 PM

ElLoco: cameroncrazy1984: serpent_sky: I know it is fun to be contrary on Fark, but are people really choosing the IRS over servers who make farking $2.00 an hour and live off what are often paltry tips? Seriously?

Yep. Sorry, but that's the way it is. As I said, tax law doesn't have a sentimentality clause. If I win $500 on craps the day I go to the casino with my dying aunt, do I get a free pass too?

You really need too gay people who know what they're doing to do your taxes. You haven't a clue, and this makes twice in one thread that you've been wrong.


fixed that for u
 
2013-07-07 01:08:43 PM

serpent_sky: I know it is fun to be contrary on Fark, but are people really choosing the IRS over servers who make farking $2.00 an hour and live off what are often paltry tips? Seriously?


Yes. I tip my servers well enough that I don't see why they can't pay taxes. Do you not?
 
2013-07-07 01:10:29 PM

ZAZ: If one of my waitresses gets a $500 tip I make sure to report it to the IRS as a tip. The IRS assumes that restaurants with low tip receipts are cheating on taxes.


I tip in cash so the IRS doesn't see the funds.  Maybe if you didn't pay waitstaff shiatty wages I wouldn't feel inclined to do so.  Ass.
 
2013-07-07 01:11:30 PM

serpent_sky: I know it is fun to be contrary on Fark, but are people really choosing the IRS over servers who make farking $2.00 an hour and live off what are often paltry tips? Seriously?


Choosing has nothing to do with it. The questions are whether the tax code is clear about what should happen here (arguably yes) and whether that law has a rational basis (also yes).
 
2013-07-07 01:13:54 PM
I wonder if a certain butthole in Scottsdale Arizona has factored this in?
 
2013-07-07 01:14:33 PM

Kozaru: ZAZ: If one of my waitresses gets a $500 tip I make sure to report it to the IRS as a tip. The IRS assumes that restaurants with low tip receipts are cheating on taxes.

I tip in cash so the IRS doesn't see the funds.  Maybe if you didn't pay waitstaff shiatty wages I wouldn't feel inclined to do so.  Ass.


Maybe the waitstaff at his business do well, anyway. I know my sister would be pissed as hell if they bumped up her pay and told people not to tip. She makes a killing for the time she puts in.
 
2013-07-07 01:14:57 PM

serpent_sky: I know it is fun to be contrary on Fark, but are people really choosing the IRS over servers who make farking $2.00 an hour and live off what are often paltry tips? Seriously?




Some states (such as Oregon) pay servers minimum wage. Waiting tables/bartending in such states is much more lucrative than other states. An additional 60$ a shift adds up.
 
2013-07-07 01:17:02 PM
Seems like he could have said, here, take this $500 in cash that I took out of my account.  After I die, go to this pizza place I like, ask for this waitperson I like, and quietly hand them the $500 in cash.  Tell them whatever, tell them it's from someone who wants to be anonymous, whatever, but it's a gift of kindness, no questions asked.
 
2013-07-07 01:18:56 PM

poot_rootbeer: serpent_sky: I know it is fun to be contrary on Fark, but are people really choosing the IRS over servers who make farking $2.00 an hour and live off what are often paltry tips? Seriously?

Choosing has nothing to do with it. The questions are whether the tax code is clear about what should happen here (arguably yes) and whether that law has a rational basis (also yes).


The tax code is clear. The 'gift' came in the form of a gratuity for services rendered. Food service gratuities are taxable income. The person 'technically' has to report the $500 as gross income. What these people should have done is to tip the server accordingly, and then place $500 in with the check with a small, appropriate note indicating that the extra cash was a bequested gift. Now the $500 is not taxable.
 
2013-07-07 01:20:21 PM
How much of an entitled biatch do you have to be to get a $500 tip and complain that it's taxable?
 
ZAZ [TotalFark]
2013-07-07 01:27:44 PM
My comment was a hypothetical, since I'm not a restaurant owner. But I would report the $500 if I were and found out about it, because it potentially affects my business taxes. See Fior D'Italia v. United States.
 
2013-07-07 01:28:32 PM

Bashar and Asma's Infinite Playlist: How much of an entitled biatch do you have to be to get a $500 tip and complain that it's taxable?


How much of an ignorant twit do you have to be to think that happened?
 
2013-07-07 01:30:17 PM

DamnYankees: All this is a tax professor using this real world example as a thought experiment for his tax class. This is what's called being a good teacher, sounds like a fun problem.

BarkingUnicorn: Of course it's income.  A gift is given in return for nothing.  A tip is given in return for service.

If the guy's will said, "Give $500 to a server  but don't order anything," that would be a gift.

Disagree. I think its a gift, not income. Income is something you earn in exchange for doing a service. The waiter here didn't actually earn this money for a service, but rather got this money because the giver wanted to be generous. I think you would argue that (500-0.15*bill size) is the amount of the gift, and the remainder is income.


How unrealistic.  The IRS doesn't look at the giver's alleged intent or whether the amount of a tip is "reasonable and customary."  It only looks for transactions.  Give service, receive tip, pay tax.  Do nothing for giver, receive gift, no tax.
 
2013-07-07 01:31:03 PM

thurstonxhowell: Kozaru: ZAZ: If one of my waitresses gets a $500 tip I make sure to report it to the IRS as a tip. The IRS assumes that restaurants with low tip receipts are cheating on taxes.

I tip in cash so the IRS doesn't see the funds.  Maybe if you didn't pay waitstaff shiatty wages I wouldn't feel inclined to do so.  Ass.

Maybe the waitstaff at his business do well, anyway. I know my sister would be pissed as hell if they bumped up her pay and told people not to tip. She makes a killing for the time she puts in.


You've made my point.  Customers effectively pay the wages, not the employer.  The fark-stick in my original post pays these folks pennies on the dollar but is still concerned about the tax implications for his business.  He should just let the IRS assume whatever percentage they assume and shut his face about the $500; it was for the waitstaff not him.
 
2013-07-07 01:31:24 PM
1) Enter restaurant, order food, pay bill & leave normal tip, leave restaurant.
2) Return to restaurant, find server, give $500 GIFT. DO NOT RECORD THE EVENT !
3) Profit.
 
2013-07-07 01:32:23 PM
The restaurant I work in automatically taxes servers on a percentage of their sales (percentage varies based on location).  A server who consistently gets 25%+  tips gets taxed on much less, and a server who makes a lower percentage may be taxed on  more than they are actually making.  So if someone handed me $500, I'm not obligated to report anything, I get taxed on what the customer spends.

sidenote, recently caught my legal immigrant boss not reporting tips for the immigrant servers that she hired.  I put a quick stop to that, and now she kisses my ass so I don't rat her out.  :)
 
2013-07-07 01:33:58 PM

thurstonxhowell: Bashar and Asma's Infinite Playlist: How much of an entitled biatch do you have to be to get a $500 tip and complain that it's taxable?

How much of an ignorant twit do you have to be to think that happened?


i.imgur.com
 
2013-07-07 01:34:25 PM

cameroncrazy1984: Just because it's a dying wish doesn't mean it's not subject to income taxes. The IRS doesn't have a sentimentality clause.


The question is what it counts as. A tip, a gift or a bequest. All 3 have different rules, which was the point of TFA.
 
2013-07-07 01:35:04 PM

ZAZ: My comment was a hypothetical, since I'm not a restaurant owner. But I would report the $500 if I were and found out about it, because it potentially affects my business taxes. See Fior D'Italia v. United States.



Ah, ok. Now we get it.  All this time we thought you were running this "restaurant" from your mother's basement.
 
2013-07-07 01:36:37 PM
how many times of "how we tip/pay waiter/waitresses" until it gets it's own tag and day like "caturday"?
/waiterday?
 
2013-07-07 01:37:37 PM

nekom: cameroncrazy1984: Just because it's a dying wish doesn't mean it's not subject to income taxes. The IRS doesn't have a sentimentality clause.

This.  Plus what's an extra $500 in the tax bracket of most wait staff?  20 bucks more in taxes?


About 2 weeks' income. Probably more like 3 weeks for a pizza delivery guy.

It's not all 24k gold toilet seats and limos for servers, just so you know.
 
2013-07-07 01:38:14 PM
Eh. It's income to the waitron. Pure and simple.
 
2013-07-07 01:38:35 PM
If you voted for Obama pay taxes. If not, then cheat and hope you are never made an example
 
2013-07-07 01:39:07 PM

Archimedes' Principal: 1) Enter restaurant, order food, pay bill & leave normal tip, leave restaurant.
2) Return to restaurant, find server, give $500 GIFT. DO NOT RECORD THE EVENT !
3) Profit.


4) Tell IRS, "IDK what happened to that $500 with which I was entrusted."
5)  Pay it back. Pay fine. Maybe go to jail.

The donation fund is up to $60K, so accounting for its use is rather a big deal.
 
2013-07-07 01:41:39 PM
Everyone should always tip at least 2200% unless the service was particularly wretched.  Only cheapskates tip 15% any more.
 
2013-07-07 01:41:56 PM

serpent_sky: I know it is fun to be contrary on Fark, but are people really choosing the IRS over servers who make farking $2.00 an hour and live off what are often paltry tips? Seriously?


Here in Washington state is minimum wage is $9.19 and they make tips on top of that.
 
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