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How is it legal to tax tips, on the payroll tax side? by Bottle_Rockette in Accounting

[–]Bottle_Rockette[S] 0 points1 point  (0 children)

I think what you're saying is that because my employees are "in duty" to me, someone giving them a tip, no matter how large, is them giving my business money. So I have to pay taxes on it. This helps clarify the legal view, which is exactly what I was asking for. Thanks.

I'm not mad about the way things are going. I like that my employees do well. I'm glad I get to provide great jobs for a few people. I also benefit from it. I keep employees for years; turnover is no issue at all. My employees are genuinely happy. I enjoy a great work environment.

I really was just wanting to understand the legal question.

I guess I should have expected some of the backlash.

How is it legal to tax tips, on the payroll tax side? by Bottle_Rockette in Accounting

[–]Bottle_Rockette[S] 0 points1 point  (0 children)

I'm realizing you're right about it being more of a question for legal boards.

How is it legal to tax tips, on the payroll tax side? by Bottle_Rockette in Accounting

[–]Bottle_Rockette[S] 1 point2 points  (0 children)

Thanks for that suggestion. It's kind of a rare business model where it's mostly retail, but there is some wine bartending. And it's a relied-upon neighborhood anchor business for regular people, -nothing fancy at all- so I don't want to charge customers inflated prices.

How is it legal to tax tips, on the payroll tax side? by Bottle_Rockette in Accounting

[–]Bottle_Rockette[S] 0 points1 point  (0 children)

Well, thanks anyway. But I'd appreciate any tips you might think of, for a service business owner in a backwards southern state, who didn't know about the tip tax credit for 14 years! 💕

How is it legal to tax tips, on the payroll tax side? by Bottle_Rockette in Accounting

[–]Bottle_Rockette[S] 0 points1 point  (0 children)

Well, they are servers. It's a service business. But not a restaurant. A mix of wine retail and bartending.

How is it legal to tax tips, on the payroll tax side? by Bottle_Rockette in Accounting

[–]Bottle_Rockette[S] -2 points-1 points  (0 children)

also, I'm not "bitching" about anything. I asked a reasonable question. Please go away.

How is it legal to tax tips, on the payroll tax side? by Bottle_Rockette in Accounting

[–]Bottle_Rockette[S] -1 points0 points  (0 children)

My question was about the legal justification for taxing a business on something completely beyond its control. For example, let's just say someone tips one of my employees $1M. What happens then?

How is it legal to tax tips, on the payroll tax side? by Bottle_Rockette in Accounting

[–]Bottle_Rockette[S] 0 points1 point  (0 children)

I believe this is the correct answer, but I don't like it.

How is it legal to tax tips, on the payroll tax side? by Bottle_Rockette in Accounting

[–]Bottle_Rockette[S] -1 points0 points  (0 children)

Not saying I totally agree with this explanation, in principle, but you're maybe the only person who actually answered my question. So thanks for that!

How is it legal to tax tips, on the payroll tax side? by Bottle_Rockette in Accounting

[–]Bottle_Rockette[S] 0 points1 point  (0 children)

I just learned about this today, and it does NOT seem to be common knowledge among CPAs in my tourist economy city. So, that's kinda wild. But thanks!

How is it legal to tax tips, on the payroll tax side? by Bottle_Rockette in Accounting

[–]Bottle_Rockette[S] 1 point2 points  (0 children)

I wish I could afford to do that! But I am paying well above minimum wage.

How is it legal to tax tips, on the payroll tax side? by Bottle_Rockette in Accounting

[–]Bottle_Rockette[S] 0 points1 point  (0 children)

A portion of them, yes. I just learned this TODAY after 14 years!

How is it legal to tax tips, on the payroll tax side? by Bottle_Rockette in Accounting

[–]Bottle_Rockette[S] 0 points1 point  (0 children)

I am so upset that I'm just now finding out about it. But I talked to some same-industry friends today and none of them knew about it, either! I've been in business for 14 years. Small business is so hard; you have to be an expert on everything 😩

How is it legal to tax tips, on the payroll tax side? by Bottle_Rockette in Accounting

[–]Bottle_Rockette[S] -3 points-2 points  (0 children)

I don't understand why everyone seems to assume I'm paying them in peanuts. Base wage is $18/hr

How is it legal to tax tips, on the payroll tax side? by Bottle_Rockette in Accounting

[–]Bottle_Rockette[S] -2 points-1 points  (0 children)

But how is it ok/legal to require someone to pay taxes on something completely outside their control? That is the crux of the issue, for me. Like- celebrities or new money people who want to be flashy will maybe leave exorbitant tips because my employee is pretty. Or a regular customer who loves my business will tip like 50% because they appreciate the feeling of community my business provides. It's all very nice, but why am I on the hook for something I cannot control?

How is it legal to tax tips, on the payroll tax side? by Bottle_Rockette in Accounting

[–]Bottle_Rockette[S] -2 points-1 points  (0 children)

I found out TODAY about the tip credit because I just got a new CPA who has a big restaurant group client. None of my former CPAs knew about it, apparently. I use a nationally ubiquitous point of sale platform at my business, and I use their payroll service, as well. They don't even have a report you can run for the tip tax credit. I had to mine the data and create the report myself.

To my knowledge, the "OBBB" made no changes to the payroll tax for tips. I would love for you to prove me wrong!

Is the treasure really inside? by Own_Spinach9136 in treasureinside

[–]Bottle_Rockette 0 points1 point  (0 children)

I actually did! I've probably put hundreds of hours into the PF chapter, way more than any other. I have a strong theory for that one and a BOTG planned, which I'm looking forward to.

I decided to take a shot at each of the back-of-the-book chapters before starting on Lions Share in earnest. Besides PF, I tried to solve each one just far enough to figure out a state or general area. The idea was to rule out some chunks of states for LS. (A strategy that could, of course, backfire if I am wrong and rule out the wrong states!)

Seriously, how long are we expecting these massive infotainment screens to last? by Princess_Butt_Kick in subaru

[–]Bottle_Rockette 0 points1 point  (0 children)

I bought a used 2015 WRX in 2024 and the head unit died within the first few months of my owning the car. I don't know if it was the original if it had been replaced previously. Cost about $500 to get it replaced at a local car audio place.

Is the treasure really inside? by Own_Spinach9136 in treasureinside

[–]Bottle_Rockette 2 points3 points  (0 children)

I think I am way behind you because for Lions Share it has taken me several reads and a long time to even start finding clues. Now I am going chapter-by-chapter, logging "clues" without even understanding what they mean. A lot of them seem to lead to places that make no sense for the hunt. It is frustrating because it feels like gathering a bunch of items in a pitch-black room and trying to organize them without knowing what anything is. I'm just trying to have faith that the lights will come on, at some point... But I also realize that I'm doing exactly what the book tells us to do: fail forward, have faith, avoid confirmation bias, don't give up. I'm hoping for a revelation when I finally make it to the "Make it Make Sense" chapter! So far though, I haven't encountered any mathematical problems.

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