Cash tip vs. credit card

A bazillion years ago when I worked restaurants the general rule of thumb was that servers would claim enough tips to bring their hourly wage up to minimum wage. But that was then and what is now may be two different things.

I delivered pizza for a summer in college. My first shift, when my manager asked me at the end of the night how much I wanted to declare in tips, I told him the whole amount I'd received. He looked at me like I was daft, and said, "Are you sure? I said how much do you want to declare."

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?

This is why you should always tip your servers in beer or marijuana.

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?

This is why you should always tip your servers in beer or marijuana.

(Sigh) Guess I left the industry too soon.

So here's the deal with this... just because you tip on a credit card doesn't mean that all those tips get claimed. Most POS systems now ask upon clocking out how much in tips you'd like to claim. It's up to the server to decide what that amount is. And the employer can't tell them what to claim either. It is widely suggested that the server claim 10% of their sales but that is mostly for the protection of the employer who also runs the risk of being audited if there are too many disparities between sales and income. Not to mention a server who repeatedly claims zero then has to be paid minimum wage for a $2.13 an hour position. And no one is going to do that.

Now there are certain restaurants that deal almost strictly in credit card and those tips go straight to a (usually) bi-weekly check, unless the tips are in cash. For that reason obviously every dollar of your tips gets counted and taxed. This sucks.

(Ninja edit for grammatical errors)