Has the habit of tipping become so powerful that tip income should not be taxed?

I did taxes for a couple of years. Not once did anyone turn in non cash tips as income. Not.the.first.time. Even the stripper whose taxes I did didn’t turn in anything as tip income. If it was cash no one reported it.
 

Trade said:
Having to depend on tips for ones livlihood is demeaning. Every job should pay a decent living wage.
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Yes - like other countries beyond USA do.

and maybe because of that, there are people who work as wait staff or bar staff long term and raise a family and make a living - and it isnt seen as a crappy looked down on job.
 
I believe it all goes back to when 'wait-staff' received no paycheck at all. Tips were their only income. A such there was no record of their income. Then they started receiving minimal p/hr pay, and fed took some of that. Then some gov-bean-counter came up with the idea that their tips should be reported.

Someone , I believe @Jeni mentioned a flat tax. That's my favorite as well.

Now, does that mean that wait-staff will report all their tips ? Not likely , unless they have a boss that keeps a running count at the end of each day, and IMO that is too labor involved.

But I sure as hell wouldn't want to live that way ... as such I have no axe to grind with them about their honesty.

If corporate CEO's and such can work the system ... why not a struggling waitress ?
 

As a person who lives with a person who owned a restaurant for 36 years i can tell you a bit about arizona. The minimum wage is lower for wait staff. The government assumes the tips will make up for the gap. So the accounting needs to reflect at least that. The daily reports and tickets were checked and tips added up and attributed to the staff that earned them. So yes…they were and are taxed at least at his business.
 
jimintoronto said:
Here in Canada all income is taxed, BUT most people have deductions that legally reduce their taxable income level. Jobs that have traditionally received cash tips, such as taxi drivers, barbers and hair stylists, bar tenders and servers, are expected to declare tips to Revenue Canada as income.

Here in the Province of Ontario, tips given to employees are NOT shared with owners or managers, by law. The Ontario minimum wage hourly rate has just been increased, again, to $17.70 an hour. That rate is increased every year, to match the Cost Of Living statistics in Canada.

So in Ontario, wait staff get at least $17.70 an hour plus tips, and at the end of the year their employer will issue them a T 4 income tax form that shows their yearly income, their tax deducted, their contributions to the Canada Pension Plan, and their contributions to the Employment Insurance Fund. Individuals can claim a number of legal tax deductions, depending on their specific situation.

I know that Revenue Canada does randomized spot checks on certain employment groups. A long time ago, in the 1980's I owned a taxi plate in a town just outside of Toronto. I drove my taxi one week out of every month ( I had a full time job that allowed me to do that ) and I rented the cab out to another driver for the other 3 weeks of the month. I declared all of the income from the taxi business, every year, and I was audited 2 years out of the 5 years that I owned it. That was typical of that industry, which sees cash tips daily.

JIMB.
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Canada only just increased public servers to mimimum wage two years ago. I know because I used to be a waitress. ( I put myself through school by waitressing )

For the most part, all food and drink servers were underpaid. Some of them, incredibly so. Many establishments took advantage of this by paying workers MUCH less. It’s no wonder that some workers would try and hide their tip money. Not that I think they should.

Quote “Until the start of 2022, many restaurant workers in Ontario were working for less than minimum wage. Not anymore. This month, Ontario eliminated the subminimum wage of $12.55 per hour, also known as the “liquor servers” wage.unquote- taken January 2022
 
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That Lady in PA said:
Those you mention are getting a better hourly wage that waitstaff receive.
In PA, the minimum is $2.83/hr.

Minimum Wages for Tipped Employees
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In California, waitstaff are paid at least full minimum wage by their employers and tips cannot be factored in. In Los Angeles, that's $17.28/hour. So they get that plus tips. Employers and managers do not receive any part of waitstaff tips.

My opinion on tips being taxed - I think they should be. They're earned income not surprise gifts. I've told this story here before but it bears repeating:
Being paid in cash may seem good at the time, but can be disastrous in the long run. Avoiding taxes, including SS taxes, makes people plenty sorry when it's time to file for benefits. Employers who don't make you pay taxes are also not paying their share on your behalf, nor are they paying disability or worker's comp insurance.

Teenagers getting a few dollars for babysitting neighbors' kids are a lot different from a lifetime of being paid under the table.

An acquaintance now in her late 60s was a lifelong waitress/bartender in high end restaurants and bitterly attests to this. As was typical, she declared almost none of her tips and lived large at the time.

After decades of working on her feet, she is no longer young, adorable, perky and energetic, so can no longer waitress, but her SS is so small that she's stuck working a hotel front desk on the night shift for little more than minimum wage. Unmarried, no children, no savings or assets, rents an apartment, and has no safety net to speak of. What saves her is a couple of generous siblings who help out from time to time.

So do I think tips should be taxed? You bet.
 
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