Do restaurants keep track of the tips waiters/waitresses receive?

[MrsBugi]

I was wondering if most restaurants make it a point to keep track of how much money their waitstaff makes in tips. If so, is the total tip amount collected and redistributed among all the servers, or does each server keep what he/she makes from each table? Does it differ if the tips are received in cash vs. on a credit card?

 

[Ryan]

Tips are not redistributed - and most places do not keep good record of the tips.

I'm a manager at Papa John's - we do not track ANY tips the drivers make - and we dont' make them report any tips. If you don't want to - don't.

 

[MrsBugi]

Hmm. My husband and I went out to dinner with another couple at a very fancy restaurant, and the 15% tip came out to almost $70. If the waiters at that restaurant don't have to report their tips, they must make quite a bundle tax-free. I wonder if the IRS would investigate a higher-end restaurant where tips are assuredly plentiful and generous?

 

[olds]

Kinda. Restraunts keep track. They go by total sales

 

[MrsBugi]

Are tips included in the total sales? They must be if it is paid with a credit card, but if paid in cash I wonder how restaurants could keep track of that. Perhaps at most places, the cash payments/tips are negligable.

 

[SarcasticDwarf]

Originally posted by: MrsBugi
Hmm. My husband and I went out to dinner with another couple at a very fancy restaurant, and the 15% tip came out to almost $70. If the waiters at that restaurant don't have to report their tips, they must make quite a bundle tax-free. I wonder if the IRS would investigate a higher-end restaurant where tips are assuredly plentiful and generous?

I believe waters/waitresses are required to report it on their taxes. Like many other jobs, it is possible to get away without doing it.

 

[olds]

Tips are not included. Restaurants report a certain percentage of the total sale as tips (don't recall the number but it is less than 15%). They are taxed accordingly.

 

[MrsBugi]

Originally posted by: oldsmoboat
Tips are not included. Restaurants report a certain percentage of the total sale as tips (don't recall the number but it is less than 15%). They are taxed accordingly.

That makes sense, the info is appreciated.

Does the restaurant then expect reimbursement from the waitstaff for the amount of tax the restaurant had to pay on their behalf? Is the waitstaff also responsible for separately reporting their tips? Wouldn't tht result in double-taxation, if that were to happen?

 

[alkemyst]

Originally posted by: Ryan
Tips are not redistributed - and most places do not keep good record of the tips.

I'm a manager at Papa John's - we do not track ANY tips the drivers make - and we dont' make them report any tips. If you don't want to - don't.

restaurants are a bit different than papa john's. However, if the customer writes in a tip on the sales slip, you just ignore it?

Restaurants will keep track of whatever is on the bill.

Cash tips some will try and ask their staff, but it's always underbid in those cases.

 

[MrsBugi]

Good info, thank you for all the help satiating my curiosity. 🙂

 

[olds]

Originally posted by: MrsBugi

Originally posted by: oldsmoboat
Tips are not included. Restaurants report a certain percentage of the total sale as tips (don't recall the number but it is less than 15%). They are taxed accordingly.

That makes sense, the info is appreciated.

Does the restaurant then expect reimbursement from the waitstaff for the amount of tax the restaurant had to pay on their behalf? Is the waitstaff also responsible for separately reporting their tips? Wouldn't tht result in double-taxation, if that were to happen?

The restraunt doesn't pay the tax, just report it.

 

[imported_Ed]

Originally posted by: MrsBugi
Hmm. My husband and I went out to dinner with another couple at a very fancy restaurant, and the 15% tip came out to almost $70. If the waiters at that restaurant don't have to report their tips, they must make quite a bundle tax-free. I wonder if the IRS would investigate a higher-end restaurant where tips are assuredly plentiful and generous?

no, because most only receive in the area of $2-$3 on hour as a regular wage. and they dont always make good tips, expecially sunday thru wednesday.

 

[MrsBugi]

Originally posted by: oldsmoboat

Originally posted by: MrsBugi

Originally posted by: oldsmoboat
Tips are not included. Restaurants report a certain percentage of the total sale as tips (don't recall the number but it is less than 15%). They are taxed accordingly.

That makes sense, the info is appreciated.

Does the restaurant then expect reimbursement from the waitstaff for the amount of tax the restaurant had to pay on their behalf? Is the waitstaff also responsible for separately reporting their tips? Wouldn't tht result in double-taxation, if that were to happen?

The restraunt doesn't pay the tax, just report it.

Ah. Who would the IRS hold responsible for paying the tax, if anyone?

 

[imported_Ed]

Originally posted by: Ed

Originally posted by: MrsBugi
Hmm. My husband and I went out to dinner with another couple at a very fancy restaurant, and the 15% tip came out to almost $70. If the waiters at that restaurant don't have to report their tips, they must make quite a bundle tax-free. I wonder if the IRS would investigate a higher-end restaurant where tips are assuredly plentiful and generous?

no, because most only receive in the area of $2-$3 on hour as a regular wage. and they dont always make good tips, expecially sunday thru wednesday.

 

[olds]

Originally posted by: MrsBugi

Originally posted by: oldsmoboat

Originally posted by: MrsBugi

Originally posted by: oldsmoboat
Tips are not included. Restaurants report a certain percentage of the total sale as tips (don't recall the number but it is less than 15%). They are taxed accordingly.

That makes sense, the info is appreciated.

Does the restaurant then expect reimbursement from the waitstaff for the amount of tax the restaurant had to pay on their behalf? Is the waitstaff also responsible for separately reporting their tips? Wouldn't tht result in double-taxation, if that were to happen?

The restraunt doesn't pay the tax, just report it.

Ah. Who would the IRS hold responsible for paying the tax, if anyone?

I think I mispoke. My ex-wife was a server. I believe the restraunt does take out the tax at what ever rate has been set. The server is responsible for the difference up to 15%. I remember her getting really small checks but making up for it in tips. She worked at Red Lobster as a server and a cocktail waitress. It's been a while so things may have changed.

 

[miri]

Servers are required to report their tips. Now more and more people use credit and debit cards so tips are recorded no matter what. Restaurants are required to keep backpaperwork for like 10 years. There is no way to not report tips once they are on a credit card slip.

 

[Koenigsegg]

Originally posted by: Ed

Originally posted by: MrsBugi
Hmm. My husband and I went out to dinner with another couple at a very fancy restaurant, and the 15% tip came out to almost $70. If the waiters at that restaurant don't have to report their tips, they must make quite a bundle tax-free. I wonder if the IRS would investigate a higher-end restaurant where tips are assuredly plentiful and generous?

no, because most only receive in the area of $2-$3 on hour as a regular wage. and they dont always make good tips, expecially sunday thru wednesday.

I don't know about where you live, but I'm pretty sure waiters here have to make at least minimum wage.

 

[miri]

Originally posted by: MrsBugi
Hmm. My husband and I went out to dinner with another couple at a very fancy restaurant, and the 15% tip came out to almost $70. If the waiters at that restaurant don't have to report their tips, they must make quite a bundle tax-free. I wonder if the IRS would investigate a higher-end restaurant where tips are assuredly plentiful and generous?

Trust me servers have to report their tips, if not the IRS will come down like a hammer on them. I can assure you that most high end restaurants clientele do not pay in cash and pay with credit cards thereby recording the tip.

 

[miri]

Originally posted by: Koenigsegg

Originally posted by: Ed

Originally posted by: MrsBugi
Hmm. My husband and I went out to dinner with another couple at a very fancy restaurant, and the 15% tip came out to almost $70. If the waiters at that restaurant don't have to report their tips, they must make quite a bundle tax-free. I wonder if the IRS would investigate a higher-end restaurant where tips are assuredly plentiful and generous?

no, because most only receive in the area of $2-$3 on hour as a regular wage. and they dont always make good tips, expecially sunday thru wednesday.

I don't know about where you live, but I'm pretty sure waiters here have to make at least minimum wage.

In Virginia waiters hourly rate is $2.13. But thats why they get tips.

 

[montanafan]

The waiter/waitress is responsible for declaring income from tips on their tax forms. Higher end restaurants that charge a gratuity on the bill are required to keep records for backup, but it's still the waiter/waitress's responsibility to declare the income from tips on their tax forms. Supposedly, if there's any question from the IRS as to whether or not the waiter/waitress are reporting honestly, the restaurant's records could be used to verify it. The restaurant is not responsible for paying tax on income from tips because it's not their money.

 

[Eli]

Originally posted by: Koenigsegg

Originally posted by: Ed

Originally posted by: MrsBugi
Hmm. My husband and I went out to dinner with another couple at a very fancy restaurant, and the 15% tip came out to almost $70. If the waiters at that restaurant don't have to report their tips, they must make quite a bundle tax-free. I wonder if the IRS would investigate a higher-end restaurant where tips are assuredly plentiful and generous?

no, because most only receive in the area of $2-$3 on hour as a regular wage. and they dont always make good tips, expecially sunday thru wednesday.

I don't know about where you live, but I'm pretty sure waiters here have to make at least minimum wage.

I know that they can make less than minumum wage as long as the business can show that they make up for it in tips, or something.

It could also vary state to state.

 

[miri]

Originally posted by: MrsBugi
Are tips included in the total sales? They must be if it is paid with a credit card, but if paid in cash I wonder how restaurants could keep track of that. Perhaps at most places, the cash payments/tips are negligable.

If your not recording at least 10% of your cash sales as tips then I can assure you the IRS will be sniffing that like a houndog to a steak. Its really a moot point since the majority of consumers use credit cards anyway.

 

[miri]

Originally posted by: oldsmoboat

Originally posted by: MrsBugi

Originally posted by: oldsmoboat
Tips are not included. Restaurants report a certain percentage of the total sale as tips (don't recall the number but it is less than 15%). They are taxed accordingly.

That makes sense, the info is appreciated.

Does the restaurant then expect reimbursement from the waitstaff for the amount of tax the restaurant had to pay on their behalf? Is the waitstaff also responsible for separately reporting their tips? Wouldn't tht result in double-taxation, if that were to happen?

The restraunt doesn't pay the tax, just report it.

Resturant pays their half of the social security taxes on servers tips.

 

[miri]

Taxes are taken out of the servers $2.13 hourly rate. That is why most servers paychecks are $0. It is not uncommon for servers to have to pay a large amount of taxes at the end of the year because the $2.13 does not even begin to cover the taxes they owe on their tips.

 

[miri]

Originally posted by: MrsBugi
I was wondering if most restaurants make it a point to keep track of how much money their waitstaff makes in tips. If so, is the total tip amount collected and redistributed among all the servers, or does each server keep what he/she makes from each table? Does it differ if the tips are received in cash vs. on a credit card?

Tips are usually distributed among the front of house staff, ie. hostesses, bussers, bartenders, foodrunners. A average tip out that a server pays out to these bussers, etc is around 3-5%.