They both are!
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No Tax on Tips!!!
- Thread starter bwframe
- Start date
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Stock grants do get taxed at the time they are awarded and then the capital gains also get taxed when the stock is sold. There may be other ways that people with lots of money avoid taxes, etc but as far as I'm aware (and I get stock grants as part of my compensation) that's how it works.
Part of my stock grant is withheld to cover income tax and both sides of that equation are reported on my W2 (when awarded) and the tax % is figured on regular income rates at that point for the value of the grant.
Then if/when I sell, depending on whether I have held it short or long term, the gain over the basis value is taxed at the corresponding capital gains rate (or a loss can be taken as well depending on the sale price of the stock).
I do agree that no tip on taxes is pandering and also would love to see a flat tax proposed/passed into law.
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Remington 90T
Marksman
More people should think that way -All tips registered on your credit cards goes through the system, its them paid out to the employes paycheck, which could be two weeks later, plus many businesses take out a % for the dishwasher and cook -Tips are for the service the wait person has given me . -- TIP IN CASH --
Stock grants? Could you explain what that is? Is that the same as being awarded stock options? If thats the case our executives are nt paying when they recieve them
How is no tax on tips fair when the employer doesn't pay at least minimum wage? That is their income then.
Do you think the employer should pay a decent wage? How do you feel?
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I always give cash so it goes directly to the server i had. Some places do all card tips as a community pot then splits with all the staff.
Options are the ability to buy stock at a certain price point (below market to incentivize) and this is different than Employee Stock Purchase Plans (ESP), which is also different than stock grants (i.e. company gives you stock).
Grants can provide more $$ than options because you don't have to purchase the stock.
I've had options at past jobs, but now get grants as well as I can purchase via ESP.
They may be avoiding taxation via tax shelters or offsetting taxes in other ways, or other means, but if you are awarded stock via grants you pay income tax when it is awarded, and you then pay capital gains on the difference from the basis when you sell it.
As far as Options, you typically would realize some income that would be taxed when you exercise the option. Being awarded an option typically has no value until you exercise the option, then taxation would occur: https://www.investopedia.com/articles/active-trading/061615/how-stock-options-are-taxed-reported.asp . Depending on how you exercise it (immediate sale or buy and hold, etc will determine the taxation).
I've been granted options from a past employer that due to the time bound nature of the option expired before it would have been valuable to exercise it (was underwater -- option price was more than market price) so I never did anything with those and there was no taxable income or gain produced.
What I'm saying is, that exercising options, or being awarded stock grants, or purchasing via ESP, etc does result in taxes at some point.
Now, once you have the stock and until you sell it, of course it appreciates and there is no taxable income or gain until it is sold for presumably a realized gain (losses could also be realized as well).
Do really rich people have ways and means to structure their taxes in a beneficial way to them... absolutely, but options, grants, etc in themselves do result in taxable income or gains at some point.
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thunderchicken
Grandmaster
You make a fantastic point. If their income is primarily based on the tips they generate, then being tax free is BS. Unless there's a true plan to do away with income tax across the board.
I mostly tip in cash but that's because a server that brought out a carryout order, once turned a $10 tip into a $100 tip after I left. As for many places holding tips until a paycheck is issued, I can't see that as an issue. The rest of us have to wait to be paid on payday too. Not sure how I feel about tips being held and divided among other staff. I've known bartenders who take pretty good care of the folks keeping their bar stocked throughout a night. Not sure if there's the same mutual respect in other food service businesses as an example
Call me when "they" decide not to tax overtime work; extra effort by the employ benefits the employer.
It's been said that 'overtime' is a result of poor managemnet planning. Maybe. But working overtime directly improves the company's finances, and the worker is taxed 'extra' for his/her efforts.
Somebody gimme a hanky.. . .
It's been said that 'overtime' is a result of poor managemnet planning. Maybe. But working overtime directly improves the company's finances, and the worker is taxed 'extra' for his/her efforts.
Somebody gimme a hanky.. . .
She's just happy with the tips...they come with promotions.
The government pretty much arbitrarily decided overtime work should cost the employer (at least) 50% more and it is doubtful the employees are at all more productive than during "regular" time. Overtime may be the result of poor planning, but I fail to see how the employer benefits more than the employee. Work done "overtime" is the most expensive work an employer has done.
BehindBlueI's
Grandmaster
- Oct 3, 2012
- 26,608
- 113
Perhaps because overtime *usually* means fewer overall employees? Fewer employees means less cost in benefits. It's cheaper to pay me 50% of my base wage for those hours than to hire another me and pay health insurance, worker's comp, etc. etc. on another guy. That'd be my guess, anyway, though just a guess.
Same is true for part-time employees.
That is true. It is less costly to have fewer employers doing more work.
I suppose that gvt. got involved stating that they were protecting workers when the real reason was to "encourage" employers to hire more people. This came about in 1938, so it's just another New Deal policy with the feds. thinking they can fix everything with incessant tinkering.
Ah thanks for that in depth explanation. So yeah they are granted stock then. I wasn't aware they pay taxes. That makes sense as a cost base income then you pay on only the gains later.
Amen!!!!
I double my income on OT yet pay double the rate of a base check. It feels like highway robbery!
So a lil rant.....
These employers save tons of money having short staff. My employer has us beat down amd then cries when we don't take call outs bc we are burnt out or tired of them screwing with us. They claim we are doing it to hurt the company when in fact they are using and abusing us.
Our benefits package off hand cost at least 100k or more per person. Our base salary is over that also. So they save roughly 300k easy per body missing.
Biggest gripe i have is say I make 200k this year after 401k, taxes, insurance, hsa, and all the other deductions I may take home about 70k which is just crazy!!!! Over 50%
If OT wasnt taxed or at least at a flat say 10% the working class would make out greatly.
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