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Meal on Card/Tip in cash. Do you do this?

A message on another thread caused me to ask the question, so I am curious. I can not remember anyone I have eaten with that splits the food on the card and the tip in cash. Another poster disagreed.

I am curious. Do you split the charges or do you pay all cash or all card.

If the former, just curious as to why?

TIA

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  1. We do both for several reasons. The waitstaff gets their money immediately if the tip is in cash. Sometimes we splits costs with friends. They get the meal, we do the tip, so cash. The next time they do the tip. Some places add up to 25% tip, even for two people, so we cross it off bill and leave what we feel is right. Usually about 18%.

    And sometimes we just add the tip to the credit charge.

    9 Replies
    1. re: Janet

      As someone who works as waitstaff, I'd like to say that the combination of your behaviors is worse for the waitstaff than if you were to just put the tip on the card.

      The reason for this is that in cases when there is no tip on the card, if the server should ever be audited (which is becoming more common from all I've been hearing lately) the IRS tends to assume that a cash tip is given and that it is similar to the average credit card tip. If you are tipping less than the tip that the house includes, when you do it in cash, the server has no record to prove it.

      Personally, when I go out, I always try to put some tip on the card and some in cash. This gives the server more freedom in how to declare for tax purposes. And I tend to be pretty generous about it.

      1. re: Russellkhan

        Russellkhan is correct. For some reason the IRS has decided that there is a large amount of untapped revenue in unreported tips. And the IRS has a formula based they use to determine what your income should have been. This can be a huge problem for waitstaff because they have no way to show that the IRS calculated number is too high.

        I always put the tip on my CC but have dined with others that do this regularly.

        1. re: bonmann

          I thought the IRS formula is 8.5% of sales. If that is correct, then most waiters are making roughly double and not paying tax on half. If it is written on the cc, then the whole amount can be included for tax purposes.

          1. re: chaddict

            In the past few years the IRS has changed the rules each year. The reporting burden on not only the waitstaff but the employer has been increased significantly. Resturants now are required to report tip income and many actually will withhold taxes upfront and make tax depsits. I have heard there is a new program that will allow for less reporting and the IRS says less challenges but at least 75% of tipped employees at the resturant have to agree to be registered in the program.

            If the IRS challenges your tip income they will look at the average tip rate for the entire resturant over the year to calculate your tip income. There are very few ways to dispute this unless you can show your average tip was at a lower percentage than the resturant average. The IRS also has the right to base the calculation on not only the receipts of that resturant but the receipts of other "similar" resturants in the area. So unless you are eating at places where the average tip is only 8.5% of the bill then your waitstaff is paying may not be based on what you left but on what everyone else left.

            1. re: chaddict

              most recent averages figured by the i.r.s. were about 13% on cash payments, and 15% on cc tips.

              with payment by debit and cc more the norm rather than paying cash, it's a wash if you leave a cash tip.

          2. re: Russellkhan

            Wow!

            I have always made a special effort to tip in cash so that servers were paid at once - so I was ready to make an immediate change when I read the first line of your post.

            However since I tip 20% for bad service and up from there I certainly am not worried that the server would be expected to pay tax on more than what I've left in cash.

            As for the idea of giving the server "more freedom" for "tax purposes"... well in additional to being completely inappropriate, it is really not my responsibility to turn backbends so that other people can duck their tax burdens leaving the rest of us to pick up the slack.

            1. re: Kater

              "in additional to being completely inappropriate, it is really not my responsibility to turn backbends so that other people can duck their tax burdens leaving the rest of us to pick up the slack."

              Well said.

              If I tip cash, I write in "cash" on the tip line, to make sure management doesn't see the empty space and think the service was poor. Is this reasonable?

              1. re: Kater

                I agree. I usually tip in cash so the servers get the money upfront plus, they don't have to pay the cc company the percent they charge. With so many servers saying they like cash to cheat on taxes, it makes me rethink what I do.

              2. re: Russellkhan

                I'll often put $1 tip on my CC and then the rest in cash or in parenthesis under tip put "$X cash" and pay whatever I want in cash (X being the total cash tip I paid). I haven't waited tables since I was 16 in high school (and only then for 3 months), but one time when I wrote "cash" in the tip area, my mom told me how the IRS had been cracking down and overestimating tips. (I have no idea how she knew this other than she eats out all the time, so maybe one of her regular waiters told her.)

                Anyhow, since then, I have always left the ball in the waiter's court. He can report his tip or not, as he sees fit. That's up to his conscience and accountant!

            2. We do both. I prefer to leave a cash tip because waitperson get's their money ASAP. Sometimes we leave the tip on the card if we have no cash on us.

              1. I agree, if tip in cash your server gets it then! If on CC...then it depends on management. Someplaces tip out from CC each night, someplaces wait. And, well when it goes through management...who knows what the server gets?
                boss

                I know this from being a caterer. We'd get tipped on CC and boss kept it. What could we say as we never saw the slip?

                Cash tip goes to server then. on CC well, ya never know.

                2 Replies
                1. re: Quine

                  From my experience, this type of thing is pretty much limited to the catering/banquet business. I don't think I've ever worked in a restaurant where regular dining tips were not received same day.

                  1. re: Russellkhan

                    Well, russellkhan, times they are a changin'. Our restaurant (and many other higher-end places these days) pays us all our credit card tips in a bi-weekly paycheck -- and they are taxed. We keep any cash tips we get, but everything else goes in the check. I don't actually mind this, as I remember all too well the years of having a multi-thousand dollar tax bill come due April 15. Now it's almost like it's a *real* job. Imagine that...

                2. Always, unless no one in the group has cash.

                  1. I try to tip in cash, CC or not. I always go under the assumption that cash is more valuable to the staff, because of instant availability and no taxes taken out. But this thread about the IRS is troublesome, I may have to rethink my habits.

                    1 Reply
                    1. re: deelish

                      And some restaraunts will even back out the charge they pay to the credit card processing company, further reducing the tip the wait staff receives.

                    2. Yes, if I'm paying with a credit card, I often leave the tip in cash if I have the cash conveniently on hand. I think it is more convenient for the server, who thereby doesn't have to wait to receive the money. I think it's appreciated, too.

                      1. From a server's opinion, I appreciate the cash tips I get all throughout my shift. I, too, get my
                        cc tips on a bi-weekly paycheck and it is definitely TAXED...
                        We also have the option to declare cash tips for tax purposes if the server's cash sales are
                        relatively good, the numbers are declared on paper at the end of the day...

                        1. I put it all on the cc at home (toronto) but when we are in Paris where it is service compris, we leave cash when we want to tip extra

                          1. I think it is hard to say that one way is better than the other. At the restaurant I worked at, all tips were pooled. All credit card tips were tallied at the end of the night and given to the staff from the restaurant. Taxing was done on an "estimated tips per hour basis". All taxes were taken out of the paycheck. So each week (if you worked one shift) you would walk out with your total share of tips from that night and a check (usually from last week's shift) for about $10.

                            I realize that there are many different ways for a restaurant to run things. I have heard of every tip being reported as you close out the check (cash or CC) for tax reporting purposes. Then there are the places that will only give the CC tips after payment has been received from the CC company. In my naive youth, I vowed that I would never want to and therefore would not work in a place that did business this way as it shows no regard for the server. But I have since realized that not everyone has that choice. There are so many ways for the restaurant to treat tipping and the reporting of tips that general rules are impossible.

                            So, now, if i'm paying by CC, i usually leave the tip by CC (unless I know that the restaurant makes the staff wait to receive these tips). There are certainly cases where I will have the tip in cash and i'll just leave that but it's more out of convenience to me than the staff. I don't get caught up in trying to determine what's going to be best for the staff in terms of receiving the tip now and in terms of what gets reported to the IRS since there are so many different ways to handle it.

                            Just my two cents.

                            1. If I'm paying by credit card, I always add the tip to the credit card amount. Lately I've been paying for my dinners (including tip) in cash, though.

                              1. Why should I help waitrons to evade taxes? I pay tax on all my income. Why are they magically exempt? Also, when I add to the charge it enables me to easily keep accurate full expense records when I take a legitimate business entertainment deduction.

                                Only time I leave cash is when it's a personal (nondeductible) meal at a small business. Always remember that businesses pay the credit card company a percentage of the FULL AMOUNT charged, and that includes tip, which doesn't even go to them. So I don't wish to harm a small biz.

                                1. All on the card. More miles/rewards, etc.

                                  The only advantage to servers having more cash is so they will buy more drinks for the kitchen crew at the end of the night!