General Discussion
In reply to the discussion: Sitting in a restaurant today I realized how much trouble we are in for [View all]unapatriciated
(5,390 posts)If you keep a daily record of tips including charge tips in a journal you will pay taxes only on the tips received. You also record what percentage is tipped out to busboys, cooks and host (you do not have to declare those payouts as income) When the law first went into effect many perceived it to require you to be taxed on 8% of your sales, not true (that was just a guideline). if you kept a daily record (and most servers do) you pay taxes based on your records not 8% of your sales. Truth be told a lot of servers made more than 8% of their sales. Those that did not worked in coffee houses or smaller family style restaurants like the one my mother owned. She was audited by the IRS regarding tips the first year the law went into effect in California. She won based on her daily journal record. It did cost her a grand to hire a tax attorney, but she was never audited again after that first year.
I was in the industry when the law was enacted and worked as a server for many years after that. Many single (divorced) mothers (like myself) worked and supported their children as servers.