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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 28
    More: Interesting, The Last Wish, Aaron Collins, Weekend Edition Sunday  
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13691 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»



Voting Results (Smartest)
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2013-07-07 10:39:58 AM
6 votes:
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 12:51:50 PM
4 votes:
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 10:54:20 AM
4 votes:
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 01:20:21 PM
2 votes:
How much of an entitled biatch do you have to be to get a $500 tip and complain that it's taxable?
2013-07-07 01:10:29 PM
2 votes:

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 10:51:23 AM
2 votes:
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 06:32:21 PM
1 votes:

ElLoco: That person asked if he/she got a free pass. I showed them the free pass. If a casino doesn't issue a W-2G because it's below the federally mandated $600 reporting level, then whether they choose to use the pass is up to them.


Choosing to commit tax evasion is not the government giving you a "free pass"

FourPetesake: We don't declare our own tips.  The management declares them for us based on each server's sales for the week.  Let's say I ring $1000 worth of sales in a week, they automatically report 15% or so.  In my paycheck, I am taxed by the government on my $5/hr base pay plus that $150 in tips.  The server has no involvement in reporting tips at all.


It doesn't matter. If your W-2 has $1000 worth of tips on it, but you received $1500 you are required to self-report the actual amount and pay the appropriate taxes. The employer's estimate is for withholding purposes, to protect them from under-withholding penalties and protect you from estimated tax penalties. Not reporting tips in excess of those on your W-2 is making the choice to evade taxes on the basis that you won't be caught.
2013-07-07 06:27:51 PM
1 votes:

ElLoco: That person asked if he/she got a free pass. I showed them the free pass. If a casino doesn't issue a W-2G because it's below the federally mandated $600 reporting level, then whether they choose to use the pass is up to them.


Well no. It's not a free pass if you still have to pay. Regardless of whether the casino issues a W2-G, it is still taxable income from the very first penny.
2013-07-07 06:25:01 PM
1 votes:

FourPetesake: I appreciate the advice, but as an experienced server in a crappy restaurant, I make a pretty high percentage on my tips so what is declared is always less than what I'm bringing home.


That being the case, it is still true that the taxes you owe are based on what you make, not what your company says you make.

FourPetesake: Anyway, I'm outta there in 2 more weeks!!!


At least you'll only have to worry about being audited for six and a half more years, then.
2013-07-07 04:56:20 PM
1 votes:

BetterMetalSnake: I don't quite understand the hate for the IRS.


You don't understand the mentality that says, "I want things for free?" I mean, you may not agree with it, sure, but not understand it?

Everyone wants something something for nothing.
2013-07-07 04:37:43 PM
1 votes:

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?


FEDERAL TIP CREDIT DOES NOT WORK THAT WAY.

/everyone makes at least minimum wage
//or their employer is breaking federal law
///and has to pay the back wages plus legal fees if they get called out on it
2013-07-07 03:49:47 PM
1 votes:

FourPetesake: 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.



I don't think you understand how the tax system works. What your employer withholds is irrelevant to your tax liability and what income is to be reported. It is simply an advance payment. You are required by law to report any tips. If the tax is less than was withheld, you get a refund, if it is more you pay the difference. Now, you may make the decision to break the law on the assumption that you will not get caught, but you are still legally obligated to report it.
2013-07-07 02:41:43 PM
1 votes:
What I'm hearing is that 8% seems to be the standard tip amount.

imokwiththis.jpg
2013-07-07 02:12:26 PM
1 votes:
"U.S. Internal Revenue Service: an agency modeled after the revenue raising concepts of the 19th century economist, Jesse James". --Robert Brault

"If you make any money, the government shoves you in the creek once a year with it in your pockets, and all that don't get wet you can keep". --Will Rogers
2013-07-07 01:55:21 PM
1 votes:

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?


So you didn't read the article, eh?

As a tax professional, if one of my clients came to me and told me that they received a $500 tip because of someone's last wish, I'd consider it a bequest excludible under Section 102, just like the commenter on the article. There is no way that such an amount can be considered ordinary tips in the course of business, so it is clearly a gift, which has supporting documentation from the man's last wishes as spelled out in his will. The IRS would have a tough time proving that this was income in the taxable sense. It really is no different than a regular joe getting a cash payment from the disposition of a will.
2013-07-07 01:49:47 PM
1 votes:

Sleeping Monkey: Most servers report credit card tips or 8%, whichever is most.


Oh, so you are telling me that it is OK to only tip 8% because that is all the server is reporting to the IRS? Thanks, I'll remember that.
2013-07-07 01:44:45 PM
1 votes:
It's a bad idea to leave really big tips. It fosters the sense of entitlement that many servers seem to have.
2013-07-07 01:41:56 PM
1 votes:

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.
2013-07-07 01:28:32 PM
1 votes:

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 01:18:56 PM
1 votes:

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 01:17:02 PM
1 votes:
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 01:14:33 PM
1 votes:

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 12:52:28 PM
1 votes:
images.wikia.com
2013-07-07 12:50:26 PM
1 votes:
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 11:05:17 AM
1 votes:

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 10:58:44 AM
1 votes:

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 10:44:48 AM
1 votes:
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 10:35:19 AM
1 votes:
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.
 
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