Why are tips taxable?

If you didn't receive this "gift," would your service be as good?

Don’t report your cash tips.

Make sure to tip your server in cash so they don’t have to report it.

Film Rep wrote:

Don’t report your cash tips.

Make sure to tip your server in cash so they don’t have to report it.

Restaurants report total sales by server to the IRS. It doesn’t matter how you transmit your tip to the server, IRS assumes you gave one and they are taxed.

It’s income for service.

at Your Service wrote:

It’s a gift. The IRS limit on gifts is $15,000 a year. Not once has anyone given me a $15,000 tip, so why do I have to pay taxes on tips?

Really? Are you serious?

It is not a "gift". You were given that money for a service; thus it is income.

at Your Service wrote:

It’s a gift. The IRS limit on gifts is $15,000 a year. Not once has anyone given me a $15,000 tip, so why do I have to pay taxes on tips?

Because it's income for services rendered. And everyone knows that. A better question would be, "Why aren't gifts taxable from the first dollar, without the $15,000 exemption?"

You could, of course, simply commit fraud, which is what a large percentage of tipped service providers do. And you'll probably get away with it, at least up to a point, since tax collectors are generally even less interested in prosecuting tipped employees than they are in prosecuting rich fraudsters.

Because you have money, and the left wants it. The left has decided that you don’t need money, and that food stamps will be sufficient for you.

Yes, the IRS (and the Department of Labor) will often make certain assumptions about tips, but their assumptions about the amount of tips are relatively conservative, so fraudsters can still get away with a lot of untaxed tips.

at Your Service wrote:

It’s a gift. The IRS limit on gifts is $15,000 a year. Not once has anyone given me a $15,000 tip, so why do I have to pay taxes on tips?

What are your feeling in regard to Fight for $15? I have been at places that pay servers a decent (or relatively decent wage) and signs are posted in restaurant, "No tipping." Would you want to earn $15 per hour if tipping were not allowed? Servers at Ruth's Chris love working for tips. Servers at IHOP, I am sure would rather earn $15 per hour.

Avocado's Number wrote:

at Your Service wrote:

It’s a gift. The IRS limit on gifts is $15,000 a year. Not once has anyone given me a $15,000 tip, so why do I have to pay taxes on tips?

Because it's income for services rendered. And everyone knows that. A better question would be, "Why aren't gifts taxable from the first dollar, without the $15,000 exemption?"

You could, of course, simply commit fraud, which is what a large percentage of tipped service providers do. And you'll probably get away with it, at least up to a point, since tax collectors are generally even less interested in prosecuting tipped employees than they are in prosecuting rich fraudsters.

AOC most certainly committed tax fraud.

Film Rep wrote:Don’t report your cash tips.

Make sure to tip your server in cash so they don’t have to report it.

I almost always pay with a card and leave no tip on the card.

Then I tip in cash. It's up to the server to decide if they want to report it or not.

Avocado's Number wrote:

at Your Service wrote:

It’s a gift. The IRS limit on gifts is $15,000 a year. Not once has anyone given me a $15,000 tip, so why do I have to pay taxes on tips?

Because it's income for services rendered. And everyone knows that. A better question would be, "Why aren't gifts taxable from the first dollar, without the $15,000 exemption?"

You could, of course, simply commit fraud, which is what a large percentage of tipped service providers do. And you'll probably get away with it, at least up to a point, since tax collectors are generally even less interested in prosecuting tipped employees than they are in prosecuting rich fraudsters.

The 15,000 gift limit is related to the estate tax exemption. The estate tax exemption is reduced by the amount of the gift given.

F the Left wrote:

Because you have money, and the left wants it. The left has decided that you don’t need money, and that food stamps will be sufficient for you.

Yes, leftists recently invented the concept of a "tax" on "earned income." This is a radical new Big Government Doctrine that has been unilaterally implemented by the communist Biden administration. Donald J. Trump would never have allowed it. It is time for we the people to put a stop to this unfair, illegal government theft.

...why does the government need to know any of our income totals...?!

Because numerous people have made this argument and have lost in Tax court. Some putting it simply your opinion doesn't matter but the opinion of the tax court does.

bladerunner wrote:

Avocado's Number wrote:

Because it's income for services rendered. And everyone knows that. A better question would be, "Why aren't gifts taxable from the first dollar, without the $15,000 exemption?"

You could, of course, simply commit fraud, which is what a large percentage of tipped service providers do. And you'll probably get away with it, at least up to a point, since tax collectors are generally even less interested in prosecuting tipped employees than they are in prosecuting rich fraudsters.

The 15,000 gift limit is related to the estate tax exemption. The estate tax exemption is reduced by the amount of the gift given.

The current rule is that an individual taxpayer can give up to $15,000 each to an unlimited number of persons in a single year without any federal gift tax being owed & without reducing the amount excluded from federal estate taxes after death.

No matter how many gifts an individual taxpayer makes annually, so long as the gifts are to different people & do not exceed $15,000 per annum each - or $30,000 if given by a couple - the gifts do not count as part of the lifetime total excluded from the federal estate tax - which for 2021 is $11. 7 million for an individual & $23.4 million for a couple.

If an individual gives someone else $25,000 in a tax year, only $10,000 would be subject to federal gift tax & only $10,000 would be deducted from the lifetime amount excluded from federal estate taxes.

This rule allows very wealthy people to hand down significant amounts of money to their descendants & heirs without the grantor or recipients paying any tax & without reducing the amount exempt from estate tax when the grantor dies.

Not taxable till you commit to accept that it is yours . Take the money 💰 home , and if you say ,that is not my money yet , until I accept it .then no tax.

F the Left wrote:

Because you have money, and the left wants it. The left has decided that you don’t need money, and that food stamps will be sufficient for you.

Yet its the red states who avail themselves of the medicaid, disability and welfare.

Its the blue states that receive less federal taxes back, and the red states that ride on their backs.

luckylucky lucky wrote:

F the Left wrote:

Because you have money, and the left wants it. The left has decided that you don’t need money, and that food stamps will be sufficient for you.

Yet its the red states who avail themselves of the medicaid, disability and welfare.

Its the blue states that receive less federal taxes back, and the red states that ride on their backs.

It's not quite that simple: