Question by Sam D: I’m a waiter at a restaurant– how does tip declaration affect my paychecks?
I’m currently employed as a server at a chain restaurant. At the end of the night, the computer system prompts me to declare my tips, which I do. When my paychecks come, however, there is a huge sum taken out of my paycheck because of these declared tips.
My gross pay is $ 1500 typically but my net pay is less than $ 400. Of the deductions, $ 150 goes to federal taxes, $ 100 to social security, $ 20 to medicare, and nearly $ 900 for “declared tips”!! My manager has told me this is normal, but it sounds absurdly high. There is no way I declare more than $ 1800 in two weeks in tips, so they automatically take away more than 50% of what I make in tips?
How does that work?!
Best answer:
Answer by Tim
Because you work at a chian, there are many factors that affect you.
The IRS requires employers to calculate your credit card tips and use that same percentage towards your cash tips. The cash and credit card tips are added together for your total tips.
The big chains also use POS terminals that tracj your sales and the credit card tips, so you can’t fudge the numbers.
The tips are then added to your paycheck to calculate the taxes. After the taxes are deducted, the tip amount is then deducted back out of your check. (you already received the tips).
It is kind of confusing, but it sounds right.
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I'm a waiter at a restaurant-- how does tip declaration affect my paychecks?
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