Tipping before tax?
March 25th, 2014 at 7:31:28 PM
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Oh no another tipping thread? Well a little different slant. I eat out at least once every day, many days twice. But, these are lower end meals, usually courtesy of the casino buffets or the lower end restaurants like your Grande Cafe's (stations), Tuscany Gardens, 24/7 café (palms) or D Grille. Rarely higher end steakhouses and such.
Now last week, I took both my housemates out for a more expensive dinner to celebrate one of their birthday. This was a high end place, not associated with a casino, well high end to us. lol So when the bill came, the tax alone came to $22. Now here's my question: Why am I supposed to figure my tip on the entire bill. In other words why should I tip on tax? The server should benefit because my government is taxing me? Yeah, call me cheap if you want (I've been called worse), but I don't think I should tip on the tax.
Now last week, I took both my housemates out for a more expensive dinner to celebrate one of their birthday. This was a high end place, not associated with a casino, well high end to us. lol So when the bill came, the tax alone came to $22. Now here's my question: Why am I supposed to figure my tip on the entire bill. In other words why should I tip on tax? The server should benefit because my government is taxing me? Yeah, call me cheap if you want (I've been called worse), but I don't think I should tip on the tax.
March 25th, 2014 at 7:36:14 PM
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I can't answer the question as to why this should be, but I do agree with you that one would not be wrong to only tip on the food costs. The waiter/waitress delivered the food/drinks to you, not the tax...lol
https://wizardofvegas.com/forum/off-topic/gripes/11182-pet-peeves/120/#post815219
March 25th, 2014 at 7:41:46 PM
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Usually pre-tax, minus the cost of wine or alcohol which has a high markup. If it's at a casino and the waiter can do some magic with comps and move appetizers and entrees around the guy getting the comp so we all pay less he usually gets a lot more since he saves money.
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March 25th, 2014 at 7:42:18 PM
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I have always understood that you do not tip on sales tax. BTW, I had a wonderful split check experience this weekend in Vegas.
March 25th, 2014 at 8:42:05 PM
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I tip on the bill total, minus taxes, plus the value of anything provided for free. So if the bill total is $108, the tax is $8, and I was given a free refill on a $12 glass of wine, then I would calculate the tip as a percentage of $112. However, djatc's comment about the high markup for alcoholic drinks has given me pause for thought. Why tip an equal percentage on the meal and drinks? Both are priced at about a 300% markup on cost, but the effort in uncorking a bottle of wine doesn't compare with preparing fresh produce. Hmmm....
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March 25th, 2014 at 9:04:30 PM
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Quote: 1arrowheaddrI have always understood that you do not tip on sales tax. BTW, I had a wonderful split check experience this weekend in Vegas.
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March 25th, 2014 at 9:11:22 PM
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How does it work at places where lets say an 18% gratuity is already included in the bill? Do they calc it before or after sales tax?
March 25th, 2014 at 9:42:43 PM
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Restaurants.com article Can A Restaurant Charge Tax On A Gratuity? takes the position that a gratuity forced automatically added to a bill is a service charge that should be taxed.
You dont bring a bone saw to a negotiation. - Robert Jordan, former U.S. ambassador to Saudi Arabia
March 25th, 2014 at 9:51:42 PM
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Quote: BleedingChipsSlowlyRestaurants.com article Can A Restaurant Charge Tax On A Gratuity? takes the position that a gratuity forced automatically added to a bill is a service charge that should be taxed.
Wait, so food bill + forced gratuity... And then tax on both?
March 25th, 2014 at 10:02:21 PM
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Quote: michael99000Quote: BleedingChipsSlowlyRestaurants.com article Can A Restaurant Charge Tax On A Gratuity? takes the position that a gratuity forced automatically added to a bill is a service charge that should be taxed.
Wait, so food bill + forced gratuity... And then tax on both?
That's how I interpret the article. That is, the gratuity may be classified as a voluntary tip or a required service charge. The tax status is different for the classifications, with service charges being taxed. Are there any bean counters out there who can weigh in on this point?
You dont bring a bone saw to a negotiation. - Robert Jordan, former U.S. ambassador to Saudi Arabia
March 25th, 2014 at 11:13:32 PM
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Quote: BleedingChipsSlowlyRestaurants.com article Can A Restaurant Charge Tax On A Gratuity? takes the position that a gratuity forced automatically added to a bill is a service charge that should be taxed.
Depends where you are. In some states services are taxable; in some states they are not.
This is kind of the opposite of what the OP was asking, though.
March 26th, 2014 at 6:29:56 AM
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This is silly! Since you can pick whatever percentage you tip, what difference does it make to the waiter if you tip 15% on the post tax bill, or 17% on the pre tax bill? Its the same.....
And I'm actually stunned, Kewlj, that you do NOT include the wine in your tipping! So if food is $100 and wine is $100, you will leave a $15 tip? I'm sure the waitstaff snarl at you as you walk out the door.
And I'm actually stunned, Kewlj, that you do NOT include the wine in your tipping! So if food is $100 and wine is $100, you will leave a $15 tip? I'm sure the waitstaff snarl at you as you walk out the door.
March 26th, 2014 at 7:32:50 AM
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Yeah soopoo makes a good point. Whether you add the tax or not it doesn't make too much difference. Most people tend to do pre tax though, I think. And I believe most suggested tipping percentages are pre tax. For restaurants that give you tipping percentage suggestions, it is also usually pre tax, but I have also seen it post tax.
And as mentioned previously, you should include the value of discounts/comps in your tip base.
And as mentioned previously, you should include the value of discounts/comps in your tip base.
March 26th, 2014 at 7:41:56 AM
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Quote: SOOPOOThis is silly! Since you can pick whatever percentage you tip, what difference does it make to the waiter if you tip 15% on the post tax bill, or 17% on the pre tax bill? Its the same.....
And I'm actually stunned, Kewlj, that you do NOT include the wine in your tipping! So if food is $100 and wine is $100, you will leave a $15 tip? I'm sure the waitstaff snarl at you as you walk out the door.
I never said anything about wine. I include the alcohol part of the bill. The part I don't like is tipping on tax.
March 26th, 2014 at 9:04:29 AM
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Quote: BleedingChipsSlowlyI tip on the bill total, minus taxes, plus the value of anything provided for free. So if the bill total is $108, the tax is $8, and I was given a free refill on a $12 glass of wine, then I would calculate the tip as a percentage of $112. However, djatc's comment about the high markup for alcoholic drinks has given me pause for thought. Why tip an equal percentage on the meal and drinks? Both are priced at about a 300% markup on cost, but the effort in uncorking a bottle of wine doesn't compare with preparing fresh produce. Hmmm....
I got in an argument with a friend about this once. We went to Olive Garden and he ordered a bottle of wine. His total with the wine was $50 ish dollars. He tipped $5 because he was refusing to tip on the wine. I ended up over tipping to make up for it. I felt that he ordered the wine knowing that the waitress works on tips. FWIW, the waitress also poured it for him anytime she was near and saw his cup near empty. I understood his point but I feel like if you order something you should tip accordingly.
Bleeding-- but I think you have your last statement wrong. The waitress does more work in getting the bottle, fighting with the cork, knowing details about the different wines (depending on your restaurant) that she does in walking to the kitchen and carrying the food to your table. The cooks are the ones who are generally preparing all of your food. Some places share tips with the kitchen but most places pay their kitchen staff a decent wage.
Expect the worst and you will never be disappointed.
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March 26th, 2014 at 9:07:03 AM
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Quote: AxiomOfChoiceQuote: BleedingChipsSlowlyRestaurants.com article Can A Restaurant Charge Tax On A Gratuity? takes the position that a gratuity forced automatically added to a bill is a service charge that should be taxed.
Depends where you are. In some states services are taxable; in some states they are not.
This is kind of the opposite of what the OP was asking, though.
I didn't read the article but I know there were some changes to this in 2014. Again I do not know if it was a national change or a Pennsylvania change. If the restaurant puts the tip on your check then they must tax it. When it is added to your check it becomes a taxable service. If you chose to tip after the fact then it is not taxable other than the normal income tax.
Expect the worst and you will never be disappointed.
I AM NOT PART OF GWAE RADIO SHOW
March 26th, 2014 at 9:54:59 AM
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The cited article points out that each jurisdiction has their own laws. Also, when a service charge is added and taxed that sometimes is a mechanism the restaurant uses to prove their employees are making minimum wage when tips are considered. Other times it can be a way the restaurant distributes the service charges among employees. When it comes to taxes there never seems to be a simple answer!
You dont bring a bone saw to a negotiation. - Robert Jordan, former U.S. ambassador to Saudi Arabia
March 26th, 2014 at 10:03:53 AM
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Quote: GWAEI got in an argument with a friend about this once. We went to Olive Garden and he ordered a bottle of wine. His total with the wine was $50 ish dollars. He tipped $5 because he was refusing to tip on the wine. I ended up over tipping to make up for it. I felt that he ordered the wine knowing that the waitress works on tips. FWIW, the waitress also poured it for him anytime she was near and saw his cup near empty. I understood his point but I feel like if you order something you should tip accordingly.
Bleeding-- but I think you have your last statement wrong. The waitress does more work in getting the bottle, fighting with the cork, knowing details about the different wines (depending on your restaurant) that she does in walking to the kitchen and carrying the food to your table. The cooks are the ones who are generally preparing all of your food. Some places share tips with the kitchen but most places pay their kitchen staff a decent wage.
I was just considering a point made in this thread, my tips always include the wine price if that's what was served and there isn't a corkage fee. I prefer wine with my evening meal, especially when dining out. However, if I feel the selection offered is steeply overpriced I have no problem making due with water. The free market at work! I agree the wine service requires knowledge and effort. If the establishment charges a corkage fee I do not tip on the wine price. Right or wrong, I feel that fee takes care of all the wine service in total.
You dont bring a bone saw to a negotiation. - Robert Jordan, former U.S. ambassador to Saudi Arabia
March 26th, 2014 at 10:05:36 AM
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Quote: BleedingChipsSlowlyWhen it comes to taxes there never seems to be a simple answer!
And that's by design... ;-(
March 26th, 2014 at 10:42:48 AM
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A "mandatory" tip should be taxed, in states that tax service charges.
A voluntary tip should never be taxed.
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If I get a bill that has 15%, 18%, and 20% suggestions, I'll check to see if it is base on the total with tax. If so, I'll use the 15% number, and not a penny more. If not, I'll use the 20% number, and round to the nearest buck.
If the bill has the tip included, that's exactly what the get.
A voluntary tip should never be taxed.
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If I get a bill that has 15%, 18%, and 20% suggestions, I'll check to see if it is base on the total with tax. If so, I'll use the 15% number, and not a penny more. If not, I'll use the 20% number, and round to the nearest buck.
If the bill has the tip included, that's exactly what the get.
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March 26th, 2014 at 11:13:34 AM
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Quote: GWAEQuote: AxiomOfChoiceQuote: BleedingChipsSlowlyRestaurants.com article Can A Restaurant Charge Tax On A Gratuity? takes the position that a gratuity forced automatically added to a bill is a service charge that should be taxed.
Depends where you are. In some states services are taxable; in some states they are not.
This is kind of the opposite of what the OP was asking, though.
I didn't read the article but I know there were some changes to this in 2014. Again I do not know if it was a national change or a Pennsylvania change. If the restaurant puts the tip on your check then they must tax it. When it is added to your check it becomes a taxable service. If you chose to tip after the fact then it is not taxable other than the normal income tax.
This is a completely unrelated matter.
You are confusing sales tax (charged to the patron) with income tax (charged to the employee). Also, tips were always taxable income, the only difference is whether it is subject to payroll taxes. The idea here is that if I give a waitress a $10 tip, that is money from me (not from her employer) so it is not payroll (she does not get a W2; she does not pay FICA, etc). She still must report it as income (whether or not cheating goes on here is another matter). On the other hand, if her employer charges me $10 and gives that money to her, it is money from her employer, not from me. It is part of her W2, income taxes are withheld, she owes FICA, her employer must pay its share of social security taxes, etc, etc. It's no different than a paycheck.
My point was that in some states (eg, CA) services are not subject to sales tax, but goods are. So, for example, if I go to supercuts and get a $15 haircut, there is no sales tax on that. But if I also buy a tube of hair gel while I am there, I have to pay sales tax on the gel.
So if I go to a restaurant and buy $100 worth of food and they tack on a $15 service charge, I have to pay sales tax on the $100 but not on the $15.
March 26th, 2014 at 11:32:09 AM
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In some restaurants in Ohio, the server is income taxed on a percentage of the bills. I believe it is around 9% of their bills. This is to make sure that the government gets their fair share. So if a waiter gets stiffed, he still has to pay income tax on a percent of his bills for the day.
Due to this, and knowing some servers, I tend to tip 20 to 25% of the total bill, to offset the stiffs.
Due to this, and knowing some servers, I tend to tip 20 to 25% of the total bill, to offset the stiffs.
March 26th, 2014 at 12:49:37 PM
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I did say I don't tip on alcohol, but I don't drink alcohol neither. Usually if I don't tip on something it's because I don't get the service anyway. If I could use my comps for takeout at every place I would just because I hate tipping, but that's another thread all together. This is coming from someone who used to work for tips.
"Man Babes" #AxelFabulous
March 26th, 2014 at 6:25:12 PM
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Quote: AxiomOfChoiceQuote: GWAEQuote: AxiomOfChoiceQuote: BleedingChipsSlowlyRestaurants.com article Can A Restaurant Charge Tax On A Gratuity? takes the position that a gratuity forced automatically added to a bill is a service charge that should be taxed.
Depends where you are. In some states services are taxable; in some states they are not.
This is kind of the opposite of what the OP was asking, though.
I didn't read the article but I know there were some changes to this in 2014. Again I do not know if it was a national change or a Pennsylvania change. If the restaurant puts the tip on your check then they must tax it. When it is added to your check it becomes a taxable service. If you chose to tip after the fact then it is not taxable other than the normal income tax.
This is a completely unrelated matter.
You are confusing sales tax (charged to the patron) with income tax (charged to the employee). Also, tips were always taxable income, the only difference is whether it is subject to payroll taxes. The idea here is that if I give a waitress a $10 tip, that is money from me (not from her employer) so it is not payroll (she does not get a W2; she does not pay FICA, etc). She still must report it as income (whether or not cheating goes on here is another matter). On the other hand, if her employer charges me $10 and gives that money to her, it is money from her employer, not from me. It is part of her W2, income taxes are withheld, she owes FICA, her employer must pay its share of social security taxes, etc, etc. It's no different than a paycheck.
My point was that in some states (eg, CA) services are not subject to sales tax, but goods are. So, for example, if I go to supercuts and get a $15 haircut, there is no sales tax on that. But if I also buy a tube of hair gel while I am there, I have to pay sales tax on the gel.
So if I go to a restaurant and buy $100 worth of food and they tack on a $15 service charge, I have to pay sales tax on the $100 but not on the $15.
I understood the rule as you would pay sales tax on the tip and then the waitress and employer would pay payroll taxes as well. I am not expert so I was probably wrong.
Expect the worst and you will never be disappointed.
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March 26th, 2014 at 6:29:46 PM
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Quote: GWAEI understood the rule as you would pay sales tax on the tip and then the waitress and employer would pay payroll taxes as well. I am not expert so I was probably wrong.
The IRS has no interest in whether you pay sales tax on something. There is no federal sales tax.
Whether or not you have to pay sales tax on a service charge depends on how your state handles services. Some states tax goods only, and not services (CA is like this). Some tax both goods and services. Some tax neither. Possibly some tax services but not goods (although I don't know of any). 50 states; 50 sets of rules; the IRS doesn't care either way because they only collect federal taxes.
March 26th, 2014 at 7:03:45 PM
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Ok not to hijack the thread but how much if any do you tip on to go or carryout orders?
The mountain is tall but grass grows on top of the mountain.
March 26th, 2014 at 7:17:24 PM
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Quote: HunterhillOk not to hijack the thread but how much if any do you tip on to go or carryout orders?
I don't, unless there is a specific reason to.
March 26th, 2014 at 7:37:27 PM
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I usually tip 2or3 dollars for take out. I figure that they have to pack it in the bag.But I always check to make sure everything is there. It's so annoying to get home and realize that you are missing part of your order.Quote: AxiomOfChoiceI don't, unless there is a specific reason to.
The mountain is tall but grass grows on top of the mountain.
March 26th, 2014 at 8:27:19 PM
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This whole discussion is somewhat silly since it is about the 10% give or take a few percent that you see on the bill. All the hidden direct and indirect taxes that have been collected along the way are included in that bill. Typically about 50% ends up in the governments hands. Fuel tax on food production and deliveries. Taxes paid by the equipment manufacturers. The percentage of the markup that goes to pay income tax etc. etc.
Why get excited about the small portion you can actually see. I pay my tip on everything including tax and booze.
Why get excited about the small portion you can actually see. I pay my tip on everything including tax and booze.
Be careful when you follow the masses, the M is sometimes silent.
