Have you ever wondered how on earth do servers get tipped when you are using a credit card? Well, you aren’t alone in the thought, and once I wondered the same question. When we are thinking about the tipping culture it is so different around the globe. In the Scandinavian countries such as Sweden, Norway, and Finland there isn’t such thing as tips. But let god help you when you don’t tip in the U.S, you will be unleashing rage upon yourself.
It’s funny to think how different countries are in this matter. In this article, you will learn how do waiter or waitress gets tipped from a credit card, among other things (Are Waitresses Allowed To Wear Nail Polish?).
When you are ready to pay, the server will bring the card reader and swipe your card, afterwards you will write the desired tip on the receipt. Additionally, the card reader may have a built-in tipping system that will ask you how much tip would you like to give. The waiters will receive tips in the paychecks.
Therefore the servers will get their earned pay whether you pay with a credit card or cash and they will remain happy and motivated. POS systems have gotten quite popular in recent years so there is a third way on how servers get their tips from a credit card!
How to Get Tips From a POS system
POS systems are extremely helpful and powerful tools and more and more restaurants include a proper POS system and software to help them with the daily tasks, including tip management!
The way tipping works with a POS system is that when a customer swipes their card and pays the bill, POS software will automatically calculate the tip amount from the bill. Every waiter and waitress has their own POS operating identifiers and after the bill has gone into the system, it will be counted as payment where the manager or the person who is responsible for the employee’s payments will be giving the servers the exact amount of tips that the POS systems show. This is a great way to remove tip calculation and it will also solve the problem of unreported tips.
That is only a small piece of the benefits that a POS system will offer and the time that is freed when using one will blow your mind.
Do Credit Card Tips Go on Paychecks
This really depends on the restaurant’s ways to operate but in most cases yes, tips go on the paychecks, and here’s why. When paying the tips on a paycheck, it removes a lot of unnecessary hassle and efforts to constantly being on track about everyone’s tips so it is a lot easier to pay them with the paycheck. There are restaurants that pay the tips daily with direct transfer.
Do Servers Get Taxed on Credit Card Tips
Like all income, credit card tips are taxed income as well that needs to be accounted for if you receive more than $20 in a month. Credit card tips always have a trial so you can’t withhold the sums from IRS, and I can’t say this strongly enough, you shouldn’t ever withhold anything but the hard fact is that not reporting cash tips aren’t an unusual event. More on the consequences if got caught later.
Can Employer Take Tips Out of Paychecks
It is illegal for employers to take employee’s tips in every situation and it is punishable by law. However, an employer is only required to pay a $2.13 hourly wage to the employee if the tips and direct wages combined exceed the hourly minimum wage. Furthermore, as we all know that the tips will vary from month to month and if the employer pays a $2.13 hourly wage because the expectation is that you will make more than the minimum wage but you don’t, the employer must make up the difference. In addition in the U.S, employers can require employees to participate in a tip pool which means that the employees share the tips with other employees.
What is the Penalty for Not Reporting Tips
If you do not report your tips to your employer, the IRS can apply a 50% penalty on your Social Security and Medicare tax you didn’t pay. This will happen in a way that your employer will report the numbers to IRS and take the money from your wages until the amount is paid.
Is Not Reporting Tips Tax Evasion
In most cases, not reporting tips are due to negligence and the ignorance of knowing that tips are taxable income. In these cases, the IRS can apply the penalty of 50% on your taxes you didn’t pay, as stated above. However, if the IRS can prove that you intentionally haven’t reported tips for a long time, that is considered tax evasion and you could be prosecuted. As a restaurant worker, I highly advise that you report tips as stated firstly because it is required by the law, and second, it isn’t just worth risking your job because of a couple of bucks.
Recommended products for waiters
- Safety shoes: Working in a restaurant as a waiter or a waitress can be rough on your feet and times can get slippery as well sometimes. I highly recommend using proper non-slip shoes that are comfortable to stand on for the whole shift.
- Comfortable insoles: Want the maximum comfort out of your shifts? Well, gel insoles are a great way to do just that regardless of whether you have flat feet or high arch feet.
- Nail Polish Remover: My favorite recommendation for women that my girlfriend took to her use as she works in the restaurant industry as well. A powerful nail polish remover allows you to use nail polish in your free time and remove it when you get to work. No need to abandon your nail preferences just for the sake of a job.
All in all, it is a good thing that servers will get their tips no matter the method and if your restaurant still isn’t using a POS system, I highly recommend one because of the huge benefits and time savings you will get from it.
I sincerely hope that you got real value from this post and got what you came for. Tipping culture varies throughout the world and what it really comes down to is that the servers should always be compensated for their hard work whether that is with a tip or not.