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Ask T. R. Miller, The SunTaxMan Your Own ...
T. R. Miller, The SunTaxMan
T. R. Miller, The SunTaxMan, Public Accountant , Tax Preparer
Category: Tax
Satisfied Customers: 148
Experience:  30+ years in Public Accounting and Tax Preparation
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Waitress Taxes

Customer Question

I’m a NY waitress, I make 400.00 a week in tips, my
boss pays me 80.00 a week in cash for 40 hours.
She claims me for 300.00 a week. Is this correct.
I've been there for 7 years and about to retire, I've been told
this is not correct.
Submitted: 11 years ago.
Category: Tax
Expert:  T. R. Miller, The SunTaxMan replied 11 years ago.

What do/have your W-2 forms shown as income for the last 6 years?

Expert:  JBE, CPA replied 11 years ago.
By law you are required to be compensated the minimum wage rate of $5.15 per hour. Employers are permitted to credit your minimum wage with a portion of the tip income that you report. Employers, therefore, are allowed to pay the waitstaff an hourly minimum wage of $2.05 per hour as long as the tip income exceeds $3.10 per hour.

From the description you porvided it appears that you have been underreporting your income by approximately $100.00 per week. Therefore, neither you nor your employer have been contributing as much as should have been to the Social Secuirty Administration and as a result you will not have as much credited to you for computing your benefits when you retire. You also underreported your income tax.

Since this has been an ongoing situation there isn't much that can be done.

JBE, CPA
Expert:  Sandi Hargrove, SkyHawks replied 11 years ago.

 Several factors exist.


If you did not split tips with others(buss, cooks, counter help, prep cooks, etc) you should have income of 480 per week.  You are not required to report your first 20 per month in tips to your employer even though it is required to be reported as income on your return.


You may wish to file a complaint with IRS if you did report your tips to your employer and the employer falsified your income.  Since the length of time exists for this problem, you may be determined to share the guilt equally.  Be aware that a fine of up to 50% of the ss and medicare tax that would have been due can be assessed as well as any income tax, ss tax, medicare tax and state tax.


IRS will possibly charge you OR the employer the tax, penalty and interest.  If you have your proofs and IRS assesses the amounts to you, you will need to file a lawsuit to recover any payment from the employer if a court deems them at fault.


Your social security/medicare benefits may be lower than what they should have been if your income was reported correctly.

Customer: replied 11 years ago.
Reply to T. R. Miller, The SunTaxMan's Post: Thank you for the reply, she shows 300.00 a week. I was
told we only pay 8% on our tips. Minimum wage is 3.30 but
she gives me 2.00 an hour cash. which means she keeps
52.00 a week towards my taxes. is this right?
Expert:  T. R. Miller, The SunTaxMan replied 11 years ago.

My apologies for not responding sooner. I have been out of the office for most of the day.


Does that $52.00 show on the w-2? And probably to give you a more accurate answer, it would be good to review a copy of the W-2. If I can help you further with this, my address and fax number are posted on my web site. Please do not try to send a copy of the W-2 via email.

Customer: replied 11 years ago.
she gave me 80.00 a week (40) hours. I brought home on
average of 80.00 a day in tips after she took out 15% for bus
boys. This is another issue the people she named "bus boys
were in fact counter men, delivery boys, cashiers, stock boys
and so on, leaving them very little time to assist myself and
the other 3 waitress. I knew she was cheating us and left on
a few occaisions. My age is a problem in finding work so I
always ended up going back. She does not pay Holidays,
vacations or overtime. The help is in agreement with me,
but are afraid to back me up because at least 7 don't have
green cards. I know this is a labor issue but I'm afraid of the
IRS if she did not report the proper income.

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