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Aug 7, 2010 05:54 PM

Question about massachusetts minimum wage for waitress & credit card tip taxes

hi all

questions: what is the minimum wage for waitresses in MA these days? its been a while for me, so im out of the loop. a friend of mine works 40+ hours a week at a cafe here and her paycheck is $20.

also, she told me a story today that i dont remember at all happening in my day - i dont know if things are different now or if she is getting ripped off. there are 2 waitresses on, and for example today there was $180 in CC tips. they pool tips, and the owner taxed them EACH for the $180. i dont remember at all being taxed on my CC tips, and even if things have changed - shouldnt they be taxed on $90 each?

i dont i said i could so be out of the touch with all this stuff but just want to make sure friend isnt getting the shaft. the owner IS a jerk so nothing would shock me.

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  1. If I'm not mistaken, minimum wage for servers is $2.63 (really? am I remembering wrong?) As far as being taxed, are you saying that they receive their credit card tips in their paychecks rather than in cash, which would require them to be taxed? Even so, I would expect they would only pay taxes on what they make. Perhaps you misunderstood? (or your friend did?) If not, that's total BS.

    3 Replies
    1. re: purple bot

      Does not compute...........................

      1. re: purple bot

        from what i understand, she got the $90 that day in cash, and will be taxed from the $180 total on her paycheck. ?

        1. re: niccole

          Here's an idea: perhaps your friend should just *ask*. Make the owner explain it to her until she understands everything to her satisfaction, rather than having a bunch of strangers give their thoughts on the matter, second-hand. Hmm?

      2. In MA, server minimum wage is $2.63. $0.00 paychecks are common.

        If the owner forced his staff to claim tips they did not earn, he's breaking the law and should be reported immediately.

        1. "$180 in CC tips. they pool tips, and the owner taxed them EACH for the $180"

          Maybe you misunderstood your friend or she said it incorrectly. They were probably "each" taxed for $90 on the $180. If she's getting that $90 in credit card tips at the end of the shift, it wouldn't be far fetched she's getting another $90 from cash tips.

          Not knowing what her paycheck deductions look like, it's possible her paycheck may end up being $20 after all deductions.

          1. A waitress friend of mine (in GA) told me she always hoped people would tip her in cash, because she would get the whole amount, whereas the credit card tips were taxed so she lost a bit of each tip.

            So, assuming this is the protocol and servers are taxed on CC tips, your friend should only be taxed on the amount she earned ($90), NOT the $180. Why would the government tax the same amount twice?

            1 Reply
            1. re: bluemoon4515

              Not at all true. Employees are required by Federal law to report ALL tips to employer, employer then makes the proper deductions for 941 taxes, FICA, state income taxes, etc.
              If taxes withheld exceed the minimum wage for tipped employees, a "$0" pay check could result and the employee would have to make quarterly payments to the IRS.
              Restaurants also have to submit on form 8047, sales volume, credit card charged sales, cash sales, charge card tips and reported cash tips. If tips fall below 8% of sales that will trigger an inquiry, (audit) of all employees who may be under reporting tips.
              Cash tips are not "Exempt from Taxes", the Government is not THAT dumb!!!!!

            2. In a lot of places it is pretty common to assume that servers are receiving tips in both cash and on CC. The CC tips are easy to verify, the cash is not. So another common assumption is that cash tips at least equal CC tips for reporting purposes.

              7 Replies
              1. re: hannaone

                In larger,established restaurants, The IRS has gone in and set a "must meet this threshhold" for tip claiming percentages, based on the averages on checks that they can verify. Where I previously worked, that percentage was 12.5%. That means that the IRS assumed that a sever averaged at least 12.5% in tips over the course of a shift. It was up to a server to prove if they made less. Any server who couldn't meet that level over a week's time probably should find another line of work, lol. Also, there would be no benefit to an employer to report more tips than a server made because the employer must pay their share of withholding taxes based on those figures.

                1. re: soxlover

                  employers do NOT pay a share of withholding tax!!!!!!!!!!!!!! (even in Taxachusetts).

                  Employers do pay a matching amount of Social Security tax (1/3 employee, 1/3 employer, 1/3 government)

                  1. re: bagelman01

                    Unemployment tax, and Workers' compensation (tax) is based on wages paid, so it is a" tax", in most states.
                    Govt pays a % of FICA tax???????

                    1. re: ospreycove

                      Nice try, but NONE of those taxes are WITHHOLDING taxes........................
                      Unemployment tax caps at a maximum $ per worker (most states less than 10K/yr).
                      Never ran into a Worker's compensation tax, Businesses carry and pay for worker's compensation insurance based on payroll (to cover a business' liability for on the job accidents/deaths).

                      Absolutely the government matches the social security contribution (in theory, as SS is greatly underfunded).

                      Too many years as a business owner, HR executive, and an education at the Wharton School of Finance more years ago than I like to admit.

                      The business merely WITHHOLDS income tax from the employee's earnings and transmits it to the government in weekly (in most cases) deposits.

                      This came about in the late 40s/early 50s, when employees found themselves owing taxes on March 15 (later changed to April 15) and had no money left to pay. Also, It helped the Government's cash flow during the Korean War.

                      1. re: bagelman01

                        Oh. So the SS govt contribution is not at the point of the levy. In the eyes of the employer they are ALL taxes. Also in Florida there is an employee contribution (TAX) on unemployment. WC is truly a tax since state govt. MANDATES that the employer carry it. My corp. had only 125 employees, yet we were treated like General Motors, (bad example) in the eyes of the Feds. 941 taxes were indeed paid weekly, and electronically to top that..
                        As you well know, there is tremendous incentive for a corp. to under report any number that is used to determine ins. premiums, state/local taxes, as well as the greedy Feds.

                        1. re: ospreycove

                          Yes businesses are subject to mandatory taxes and expenses, BUT you miss the point, DON'T call it WITHHOLDING TAX when it is something else.

                          1. re: bagelman01

                            Scusa signore, ma non-importa...............O.k. From my political point of view........., fees, mandates, 941s, mandated premiums, impact fees, etc. etc. are all TAXES.
                            You are correct on the collection of employee taxes and submitted through the employer, an infringment on the employers time and resources.