Stephen Sprunk wrote:
On 29-Feb-12 15:46, Adam H. Kerman wrote:
Stephen Sprunk wrote:

In the US, I rarely hear of restaurants not passing on tips to waiters,
but they _do_ have to take out taxes and report that income to the
gov't, whereas it's up to the waiter to report cash tips--and most
don't. This can add up to a significant difference in income for a
waiter, especially given all the special tax credits and such they can
qualify for by not reporting most of their income.

That law changed a long time ago. The employee reports both cash and
credit tips, not just cash, to his employer.

What the law says and what actually happens are often quite different.

Yes, Stephen. You still failed to note that the employee is required
to report ALL tips to his employer, not just cash tips, which is
why I followed up.

Payroll taxes are withheld at the usual rates on both wages and tips.

... except the employer doesn't _have_ the cash tips, so they may end up
withholding the employee's entire wages to get enough.

In the bit you cut out, I already explained that a waiter who receives
high tips may have to pay estimated taxes. But thanks for clarifying
remarks that didn't require clarification, if you hadn't deleted them.