Tips/Gratuities

[swedish weave]

In one post you say that you "post facts" and in the next you indicate that someone shouldn't hold their breath waiting to you to post facts.

 

Which is it?

I post facts. What I said I won't post is also facts, but I will not post confidential information.

If you are waiting for me to post that info, it will be a long long time.

Understand, now ???

[triptolemus]

I post facts. What I said I won't post is also facts, but I will not post confidential information.

If you are waiting for me to post that info, it will be a long long time.

 

I'm not waiting for you to do anything. I couldn't give two craps for what people choose to do with their money.

[Thomcat1288]

I always bring bills for the room service staff. $2 per order usually

 

 

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[swedish weave]

I'm not waiting for you to do anything. I couldn't give two craps for what people choose to do with their money.

 

Why did you ask ?????

[bigbadandugly]

So, I'm assuming you either purchased the 7 day SDP or got 3 as a promo and purchased the 4 SDP.

 

Let's just say it was the 7 SDP which costs $129 plus $23 in gratuity. For 7 nights of 3+ course meals. Comes out to $21.75 pp pd including tip (btw, the per night tip pp is $3). And in your mind that's double paying and double tipping? Have to disagree, that's taking into mind if the cost you already paid in terms of the included dinner and DSC and simply adding a surcharge on top of it for the upgraded menu/ambiance.

 

 

+1

 

 

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[nikkinurse]

We don't prepay we prefer to tip those that have deserved it. You get envelopes at guest services for this.

 

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[Tony52]

We just returned from an Asian cruise, Princess, as many UK, OZ, NZ as US. Everyone except US we met removed the gratuity from their bill. Our dinner mates tipped the waitress with an envelope the last night. It seems tipping is a US thing.

[ray98]

The only 'tip' that a person gets tax free is cash that goes into their hand and then their pocket. Tips/DSC/Gratuities, whatever corps. call them, and these monies that get paid to the corp., they are taxed.

 

When you go to a restaurant, and put your tip on your credit card receipt, that is traceable income and the wait staff gets taxed on it. It would have to be the same with cruise lines.

 

No....that isn't how it works.

[bigbadandugly]

No....that isn't how it works.

 

It's unclear why you would make such a statement without addressing where the previous poster went awry in her comments. Please do so and provide some basis supporting your comments. It seems everyone on this forum thinks they're an expert yet put forth little support for their responses.

[StknCPA]

It's unclear why you would make such a statement without addressing where the previous poster went awry in her comments. Please do so and provide some basis supporting your comments. It seems everyone on this forum thinks they're an expert yet put forth little support for their responses.

A cursory Google search will show that ALL tips including cash are taxable in the US.

 

For some other countries, tips are not taxable. There are even some countries that will not tax any income if the employee worked outside of that country onboard a vessel where the employment contract is 6 months or more. Not surprisingly, this does not apply to the US or UK.

 

It is definitely not the case that cash tips are not taxable and "traceable" tips are.

 

There is an interesting general overview at www.cruiseshipjobs.com/career-advice/wages-banking-savings-taxes/ .

 

Incidentally, this article linked above does use the terms tips and gratuities interchangeably. It also includes gratuities automatically deducted from the passenger's onboard account.

 

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Edited July 21, 2017 by StknCPA
Typo/Spelling

[sanger727]

A cursory Google search will show that ALL tips including cash are taxable in the US.

 

For some other countries, tips are not taxable. There are even some countries that will not tax any income if the employee worked outside of that country onboard a vessel where the employment contract is 6 months or more. Not surprisingly, this does not apply to the US or UK.

 

It is definitely not the case that cash tips are not taxable and "traceable" tips are.

 

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In the US the true answer is somewhere in between. True, all tips received by a wait person are supposed to be reported and taxed, whether cash or credit. But it's also true that cash tips are untraceable and therefore less likely to be reported.

 

Can only speak to waitressing, but you start the night with small bills you bring to work with you (to make change on cash bills). Your bank for the night is in your apron, you don't go back and forth between a cash register. You spend the night accepting cash payments for bills, giving change, and accepting cash tips. At the end if the night you 'cash out' at which point the computer has calculated what you owe. You pay what you owe back to the restaurant minus the credit card tips they owe you. So you take home your original bank plus cash tips plus credit card tips via cash.

 

At the end of the year when you do your taxes you get a W-2 that lists your hourly pay and your tips (they can only list credit card tips since that's all they know about). You have a duty to report cash tips as well, but most people don't. They only time someone would really get on you about reporting cash tips is if your credit card tips were so low that you didn't achieve minimum wage. In that case the restaurant would have to pay you enough to make you at true minimum wage (not server minimum wage). But I didn't see that happen, a bulk of tips are on credit card.

 

So both r correct for the US, all tips are taxable but cash tips are usually not reported and therefore not taxed.

 

 

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[StknCPA]

In the US the true answer is somewhere in between. True, all tips received by a wait person are supposed to be reported and taxed, whether cash or credit. But it's also true that cash tips are untraceable and therefore less likely to be reported.

 

Can only speak to waitressing, but you start the night with small bills you bring to work with you (to make change on cash bills). Your bank for the night is in your apron, you don't go back and forth between a cash register. You spend the night accepting cash payments for bills, giving change, and accepting cash tips. At the end if the night you 'cash out' at which point the computer has calculated what you owe. You pay what you owe back to the restaurant minus the credit card tips they owe you. So you take home your original bank plus cash tips plus credit card tips via cash.

 

At the end of the year when you do your taxes you get a W-2 that lists your hourly pay and your tips (they can only list credit card tips since that's all they know about). You have a duty to report cash tips as well, but most people don't. They only time someone would really get on you about reporting cash tips is if your credit card tips were so low that you didn't achieve minimum wage. In that case the restaurant would have to pay you enough to make you at true minimum wage (not server minimum wage). But I didn't see that happen, a bulk of tips are on credit card.

 

So both r correct for the US, all tips are taxable but cash tips are usually not reported and therefore not taxed.

 

 

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Based on how you are saying your company has done this, you must be working for a somewhat sophisticated restaurant. Many restaurants could not figure out which charged tips belong to whom in the same day. I guess a real small restaurant could also do that.

 

Employees are supposed to report cash tips to their employer so that payroll taxes can be withheld/paid. In my opinion, the restaurant and the employees are asking for trouble in the event of an audit if there are literally​ no cash tips reported. The IRS can and does assess taxes based on ratios and analysis. It has excellent information about the restaurant industry.

 

I have only worked with a handful of food servers, but they all did report their cash tips.

 

My, we have digressed from the original subject of this thread

 

 

 

 

 

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[fshagan]

Based on how you are saying your company has done this, you must be working for a somewhat sophisticated restaurant. Many restaurants could not figure out which charged tips belong to whom in the same day. I guess a real small restaurant could also do that.

 

The point of sale system keeps track of the servers, the bills, and the tips. The IRS uses a formula to determine if the server is reporting their cash tips, and the assumed rate is 8% of your total meal receipts. If a restaurant has several servers that report less than 8% tips on their taxes the IRS can require the restaurant to add a service charge to the bill.

 

You must report all tip income to your employer by the 10th of the month following receipt of the tips, so most restaurants that are compliant have the servers report tips nightly or weekly. Restaurants with 10 or more workers must report all tips paid to servers as well.

 

For the servers, wages and cashed-out tips are included on the paycheck, tax withholding calculated, and then the cashed-out tips deducted from the net pay. Often the servers are "below zero" so you can adjust the amount of federal withholding, then state withholding, to get them to zero for the payroll. QuickBooks for restaurants includes ways to do this. For doubters among us, here is the explanation from the IRS: https://www.irs.gov/businesses/small-businesses-self-employed/reporting-tip-income-restaurant-tax-tips

 

The fact that people cheat on their taxes shouldn't surprise us. They do. Some get caught.

 

My, we have digressed from the original subject of this thread

 

Indeed, we have. But it is instructive to see just how misunderstood tipping is even among those that worked in service jobs where tips were received.

 

And you're right; not every country taxes tips. The Philippines does not tax tips, so the Filipino workers are glad to receive as much of their pay designated as "tips" as possible.

 

And no, American cruise lines with ships registered in foreign countries do not pay income tax on that ship's earnings, so there's no advantage to the cruise lines to have pay segregated into wages or tips. It's just an expense either way. And since they don't pay income tax, it doesn't matter anyway.

 

If you read their annual reports, in the Risks section, they report a risk to earnings if the federal government ever decides that they do not qualify for a tax exemption under 26 CFR 1.883-1 and following (search the text for "883" and you'll see the explanation they give their shareholders).