No Tax on Tips!!!

[foszoe]

Amen!!!!

I double my income on OT yet pay double the rate of a base check. It feels like highway robbery!

The taxes at the end of the year all even out. The tax withheld each check treats that check like it is your annual income.

So if you make 1000/week that would be an income rate of 52,000/year and its taxed as such.
If you get a bunch of OT and make $2000 in a week, it will be taxed as if you make 104,000 year.

At the end of the year, when you do your taxes though you will only pay the tax on annual income.

 

[sapper83]

The taxes at the end of the year all even out. The tax withheld each check treats that check like it is your annual income.

So if you make 1000/week that would be an income rate of 52,000/year and its taxed as such.
If you get a bunch of OT and make $2000 in a week, it will be taxed as if you make 104,000 year.

At the end of the year, when you do your taxes though you will only pay the tax on annual income.

Yeah they even out but the rate is insane! I am lucky to not owe and i claim single 0. In reality im married with 3 kids. I paid like 40k in taxes last year to feds got back 3k.

One thing i do is roth 401k, roth ira, max hsa which hurts but will pay off later if they try to tax that some how.

 

[foszoe]

Yeah they even out but the rate is insane! I am lucky to not owe and i claim single 0. In reality im married with 3 kids. I paid like 40k in taxes last year to feds got back 3k.

One thing i do is roth 401k, roth ira, max hsa which hurts but will pay off later if they tey to tax that some how.

Taxes just plain suck no matter the rate

You may already do this, but one thing to do IF you can and even if its only partial. Try to budget your health deductible into your annual budget so that you cash flow the deductible and the HSA is never touched unless you have to.

I am not a financial advisor but if health care costs are any concern in retirement, and I had to pick between fully funding a HSA or Roth I would fully fund the HSA. Can always pay yourself back in future years tax free for health care deductibles and put that into your Roth if you want.

 

[BehindBlueI's]

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.

Well, 401k and HSA are still your money, you are just putting it away in a different bucket. After deductions and whatnot, my effective tax rate on federal income tax is reasonably close to 10% and I'm nowhere near 200k.

 

[foszoe]

If I was to gripe, I like to gripe about 401k matching funds NOT getting applied to OT income.

Is it that way everywhere that pays OT?

 

[BehindBlueI's]

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.

I don't know that it fixes everything, but I can't imagine how it's worse for the worker or for the economy.

Before the overtime rule: I can make you work 60 hours at straight time.
After: I can make you work 60 hours, but the last 20 costs me 50% more.

48-60 hours being the actual "normal" work week in the late 1800s through early 1900s for industrial jobs.

Seems like that is more protection for the worker and more incentive to hire more people under the "after" rule, while the incentive under the first is purely to squeeze as many hours out of each worker as possible.

I've been hourly, I've been salaried, and I've been a hybrid. I'll take my OT, thank you.

 

[sapper83]

Well, 401k and HSA are still your money, you are just putting it away in a different bucket. After deductions and whatnot, my effective tax rate on federal income tax is reasonably close to 10% and I'm nowhere near 200k.

True you don't get to enjoy the fruits of your labor till later on. But the good ole saying the More you make more they lol. Are you over 200k? Im all w2 income so itemization isn't there like when the wife had a home based buisness (covid death) we usually fall on the 24% bracket or next step up depending on how much i work.

 

[DoggyDaddy]

I've been hourly, I've been salaried, and I've been a hybrid. I'll take my OT, thank you.

Same here. I'm technically salaried now, but I can get OT but it's only about a 45 cents per hour premium over my "hourly" rate. But God help ya if you have to get OT. But I have a gubmint job so... Something, something... penny wise, pound foolish...

 

[BehindBlueI's]

Are you over 200k?

HAHAHAHAHAHAHAHAA!

*wipes eyes*
Oh, you were serious?

No.

 

[Ingomike]

If thats the case our executives are nt paying when they recieve them

How can you know this? Do you see their W-2?

 

[foszoe]

All of my income gets taxed. What makes servers any different?

I get my first $26,000 federal income tax free!!! Woot!

 

[sapper83]

I get my first $26,000 federal income tax free!!! Woot!

Just dont make any more then that and you wont have to pay any tax!!!! You're onto something

 

[sapper83]

HAHAHAHAHAHAHAHAA!

*wipes eyes*
Oh, you were serious?

No.

We need more utility workers if you're interested! No joke! It is like hitting the blue collar lottery!

 

[bwframe]

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?

Couple things that apparently a lot of outsiders do not know?

Typically, the tipped staff often are the highest "paid" people on the payroll, management included.

In some cases, wait staff jobs are highly sought after and fought over. The idea of the employer "paying a decent wage," does not apply here. Not even close.

Wait staff jobs in busy established places are high dollar work.

 

[sapper83]

Couple things that apparently a lot of outsiders do not know?

Typically, the tipped staff often are the highest "paid" people on the payroll, management included.

In some cases, wait staff jobs are highly sought after and fought over. The idea of the employer "paying a decent wage," does not apply here. Not even close.

Actually, I know first hand that wait staff make the most. My first job was a ponderosa grill cook! Lol.

The waiters use to fight to be on shift with me bc the other two cooks messed up food alot which messed with their tips.

Anyway at that crappy place in gary I would see these waiters counting hundreds in tips a night while i made 9$ an hour and they were salty about that!!! Did they ever tip me out for doing well for them?? HELL NO! So i have no sympathy there.

Even a fancy dancy place when the bill is like 500$ I wont do that 20% crap!!! The entitlement is ramping up, even subway asks for tips now!

I am not paying a waiter double my hourly wage. For 1 im not their employer and 2 my job is a skilled job that is highly dangerous when at most they will may slip or a get a burn from hot coffee. Also these percentages keep going up over time wth!

IMO Service and retail are meant to entey level jobs to start out and either move up or move on, not a career to raise a family on.

 

[bwframe]

Actually, I know first hand that wait staff make the most. My first job was a ponderosa grill cook! Lol.

The waiters use to fight to be on shift with me bc the other two cooks messed up food alot which messed with their tips.

Anyway at that crappy place in gary I would see these waiters counting hundreds in tips a night while i made 9$ an hour and they were salty about that!!! Did they ever tip me out for doing well for them?? HELL NO! So i have no sympathy there.

Even a fancy dancy place when the bill is like 500$ I wont do that 20% crap!!! The entitlement is ramping up, even subway asks for tips now!

I am not paying a waiter double my hourly wage. For 1 im not their employer and 2 my job is a skilled job that is highly dangerous when at most they will may slip or a get a burn from hot coffee. Also these percentages keep going up over time wth!

IMO Service and retail are meant to entey level jobs to start out and either move up or move on, not a career to raise a family on.

 

[thunderchicken]

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.

What's funny here is as you stated "the government pretty much arbitrarily decided overtime work should cost the employer (at least) 50% more". While at the same time there's exemptions for federal, state, county and municipal employees in management positions that are paid as hourly employees to only be required to be paid Straight Time while working overtime. Now, the hourly employees we oversee get paid time and a half for overtime, like everyone else. So when we are stuck working those extra hours they are actually making more per hour than we are.
That's the city choosing to use government exemptions to pay us less money and benefit from our extra hours of work.

 

[Mij]

Question??? What is a tax shelter?

 

[Ingomike]

Question??? What is a tax shelter?

Generally any way to “shelter” money from taxes.

For example, before they took this shelter away, a guy could make a lot of money at a job like doctor or pilot, they could own a hobby farm or rental properties and any losses they had on the hobby farm or rental properties could be written off of the professional income. That was sheltering money.

Corporations do it too.

 

[Ingomike]

I am not paying a waiter double my hourly wage. For 1 im not their employer and 2 my job is a skilled job that is highly dangerous when at most they will may slip or a get a burn from hot coffee.

You are kind of the employer by sitting down at the table there is an implied agreement in our society that good service deserves a 20% tip.

Also these percentages keep going up over time wth!

The percentage has not changed in my life, been an expected 20% for good service.

IMO Service and retail are meant to entey level jobs to start out and either move up or move on, not a career to raise a family on.

What a narrow minded way of thinking. There are many people that have worked hard, provided great service, and made a career out of service and retail. Do you realize they call our current economy a service economy?