Q&A: Which waitress would get more on their tax return, the one who claims all tips or the one who claimed a few?

Question by mike: Which waitress would get more on their tax return, the one who claims all tips or the one who claimed a few?
So let’s say a waitress Sarah claimed an average of $ 600 in tips per week, full time job, all year. Always got $ 0 weekly paychecks.

And then let’s say waitress Mary claimed $ 70 on average per week in tips, lying or not. She received $ 15-$ 35 per weekly paycheck.

At tax time, which waitress would receive more on their tax return, reporting what their earnings were from their W-2? And why is that?

Or would both waitresses get roughly the same?

In fact, would one or both of them actually owe instead?

Best answer:

Answer by SumDude
“Return” is a false measurement because it depends on several factors; one big one being how much the person had withheld. assuming both single; ignoring various credits

Secondly, the point is not to get a large return of your own money that was overwithheld. A person wants to plan their withholding so that what they owe the government is about what was withheld. A $ 1 refund is superbly good (although purists like me believe it is even better to owe a hundred or two on April 14.)

May’s liability would be less, because she told the irs she earned less. In fact, she would owe no tax and would get back all of the FIT she put in (250 – 500 in your random example.)

Sarah’s liability would be 600 x 52 – 10000= 20000 x 12% = 2400; or 45+ per week. Plus her SS taxes of 7.62 on 600 each week = 45 … so sarah had 600-45-45 = (about) $ 500/week OVER withheld that would be returned to her by the irs. 50wks x 500 = $ 25,000 refund.

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Q&A: Which waitress would get more on their tax return, the one who claims all tips or the one who claimed a few?

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