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Jeff Esarey

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Cash tip vs. credit card

by Jeff Esarey » Thu Jul 07, 2016 7:41 am

I apologize if this has been addressed before, but I've long wondered:
Is it preferred by restaurant staff to leave a tip in cash, even when paying with plastic? I've always tried to have cash in my pocket for a tip, mainly because I thought it was easier for the servers, but I didn't know if it made much difference or not.
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Robin Garr

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Re: Cash tip vs. credit card

by Robin Garr » Thu Jul 07, 2016 8:32 am

It's a good question, Jeff, always worth going over again. My opinion is, "It's complicated." There are some reasons, some admirable and others not so much, why servers might get a small benefit from being paid in cash. For a pretty good summary, check this link:

http://www.creditcards.com/credit-card- ... d-1280.php

In my opinion, though, cash or credit is less important than tipping appropriately. If you start with 20 percent and round up, and that means rounding up significantly at modest and inexpensive places, then I suspect the server is appreciative and doesn't care much whether it's card or cash.

One interesting nuance I've heard: If you do choose to pay with cash, put a couple of bucks on the card too, or write "cash" on the tip line of the credit card receipt, to clarify that you're not stiffing the server.
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Re: Cash tip vs. credit card

by Robin Garr » Thu Jul 07, 2016 8:32 am

PS: Welcome to the forum, Jeff! Glad you found your way here.
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Re: Cash tip vs. credit card

by Carla G » Thu Jul 07, 2016 9:23 am

Robin Garr wrote:
One interesting nuance I've heard: If you do choose to pay with cash, put a couple of bucks on the card too, or write "cash" on the tip line of the credit card receipt, to clarify that you're not stiffing the server.


That would seem to be more for tax purposes than for the server.

Given all the discussion we've had on these boards regarding banks I now try to always tip in cash and in the smallest denomination I have. At least trying to assure the server has a bank of some sort.
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Re: Cash tip vs. credit card

by Richard S. » Thu Jul 07, 2016 9:41 am

There are some restaurants where I always try to tip in cash because i'm not completely confident that a credit card tip makes its way back to the server.
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Re: Cash tip vs. credit card

by Jeff Esarey » Thu Jul 07, 2016 12:10 pm

I've had that same thought too, Richard.
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Re: Cash tip vs. credit card

by Carla G » Thu Jul 07, 2016 12:13 pm

Some do take out the same % out of the tips that cc companies charge the owners BUT I thought that was illegal.
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Re: Cash tip vs. credit card

by Jason G » Thu Jul 07, 2016 3:11 pm

If you tip cash the server can pocket the money so they essentially get it tax free. Credit card tips have to be claimed on taxes.
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Re: Cash tip vs. credit card

by Mark R. » Thu Jul 07, 2016 3:14 pm

Jason G wrote:If you tip cash the server can pocket the money so they essentially get it tax free. Credit card tips have to be claimed on taxes.

That used to be the case but I know of at least one case where the IRS came back on a server because she didn't claim enough tip money. They look to the average of one a server in that restaurant made for tips and she was only about 10% of the average so they knew something was up. This wasn't locally but....
Last edited by Mark R. on Thu Jul 07, 2016 3:28 pm, edited 1 time in total.
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Re: Cash tip vs. credit card

by Robin Garr » Thu Jul 07, 2016 3:26 pm

Jason G wrote:If you tip cash the server can pocket the money so they essentially get it tax free. Credit card tips have to be claimed on taxes.

I think that Mark is correct: It's not that simple any more. Also, there's an ethical issue at work there: Do I really want to enable a server to break the law?
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Re: Cash tip vs. credit card

by Carla G » Thu Jul 07, 2016 5:45 pm

I don't want to enable anybody to break the law, I just want all of my tip to go to the person/people that earned it. I don't think think servers should have to pay for cc charges out of their tips.
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Re: Cash tip vs. credit card

by Robin Garr » Thu Jul 07, 2016 6:32 pm

Carla G wrote:I don't want to enable anybody to break the law, I just want all of my tip to go to the person/people that earned it. I don't think think servers should have to pay for cc charges out of their tips.

Understood, Carla, and I agree. I was responding specifically to the observation that being tipped in cash makes it easy for servers to avoid paying taxes.
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Re: Cash tip vs. credit card

by GaryF » Fri Jul 08, 2016 12:00 am

I don't usually post about tipping, but I can assure you all from personal experience that the government has a very complicated formula that, no matter what a server may claim, accurately estimates what a tipped employee actually brings in.
Cash is nice- but it really makes no real difference unless the house is illegally taking percentages.
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Re: Cash tip vs. credit card

by Jason G » Fri Jul 08, 2016 11:44 am

Robin Garr wrote:
Jason G wrote:If you tip cash the server can pocket the money so they essentially get it tax free. Credit card tips have to be claimed on taxes.

I think that Mark is correct: It's not that simple any more. Also, there's an ethical issue at work there: Do I really want to enable a server to break the law?


I've never heard of this happening. I'm not saying it has NEVER happened but i served for about 10 years and never once heard of it at any restaurant in Louisville. Does anyone have an actual local example of this?

Also back in the day, most of our tips were in cash. These days most tips are probably credit card so there is no way to hide them anyway. I doubt the IRS is wasting its time on the extra bit of cash tips servers are getting.

As to whether i want to enable a server to break tax laws...i could care less. I have zero moral dilemma about leaving cash and the server pocketing it.
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Re: Cash tip vs. credit card

by Robin Garr » Fri Jul 08, 2016 12:15 pm

Jason G wrote:I've never heard of this happening. I'm not saying it has NEVER happened but i served for about 10 years and never once heard of it at any restaurant in Louisville. Does anyone have an actual local example of this?

Nope. Never been reported on the forum either, as best I can recall.

As to whether i want to enable a server to break tax laws...i could care less. I have zero moral dilemma about leaving cash and the server pocketing it.

I'd say mine is somewhere down around 0.05 percent but not zero. I could explain it from a standpoint of personal politics, but it would take a lot of words and just bore everyone. :oops:
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