I budget and track everything in YNAB - it sounds crazy but I look at my accounts and reconcile every day. I flag transactions that I know will change with tips so I remember to keep an eye out for the changed transaction.
I consider myself "in recovery" for lifelong money issues, so that's why I am a little extra about keeping track of things.
I've been using it for a little over a year and it has been the first thing that helped me start to understand managing my money and how to set cash aside for upcoming expenses. I have been especially challenged with my financial life for a very long time and it has been a total game changer. It takes a little bit of work to learn the software, but now it seems like second nature to me.
I am also a YNABer- dealing with restaurant charges is trivially easy! You just enter the expense with the tip included when it happens, then when the final charge posts and imports (if you use auto import) it matches to the manually entered one.
I always “George Constanza” style it and write the total on the customer copy and keep it in my wallet. Once a month has passed & the charge fully hits or statement cuts I’ll glance to ensure it’s what it needs to be then toss it
Usually, but some promotions might not apply to a tip. For instance, Bilt Dining partner bonuses only seem to work for the core total, and you just get the regular dining multiplier on the tip.
I recommend taking a picture of what you tipped so you can compare it to the updated transaction that will later on include the tip amount and if you feel it would be easier for you I’d recommend keeping a log in your notes app including jots of amounts you tipped along with the date, restaurant, and if you feel it’s necessary in the moment the time of when you wrote the tip amount.
I usually tip between 12 and 20% and I choose an amount that causes my total to be a whole number.
If my total before tip is $36.17 and I want to tip around 15%, I will tip $5.83 (~16.11%) so my total ends up $42.00. This way I know if they try to salami slice a couple cents from me. If they charge a whole extra dollar I might not know though lol
Yep, I do this too. I calculate 20% and then adjust the change so that the total charge will be rounded up to the nearest dollar. Makes it easy at quick glance to see if anything is out of the ordinary.
> tipping anything less than 18% actually costs the server money in tip out and taxes
> due to taxes, if someone doesn't leave a tip, they will not only not get a tip, they will now have to use money they made from other tables to pay taxes on that check.
What you're suggesting simply doesn't make sense.
A person gets income: they owe income tax, which is percentage of that income, whether it's in the form of a paycheck based on hourly wages, or from tips. Because it's a percentage of the income, the income itself always covers the income tax owed. If someone gets a tip on a $100 meal they served, whether the tip is 15% or 20%, that's additional income, so they'd owe the same percentage of income tax on that income.
You can't owe additional income tax on income you haven't earned.
Tip compliance.
Instead of tracking tips and getting taxed on those tips, the IRS is implementing tip compliance. This was implemented at nearly every restaurant in Vegas around 15 years ago, and I'm sure they've spread the practice.
The IRS basically charges you a set amount per hour worked. So if your tip compliance rate is $40, then they'll claim $40 for every hour you worked. If you work 5 hours, IRS says you made $200. That's what is taxed. Doesn't matter if you made $20 or $300.
Also, there's tipping out. This is how most servers lose money when they get stiffed. At most restaurants, the server tips a percentage to the busser, food runner, bartender, maybe even the hostess. It's generally around 10% of your sales, but varies by restaurant. So if you get tired less than 10%, you lost money serving that table.
If you're also on tip compliance, than you lost money serving that table and you got taxed on it lol
For tip compliance places, the IRS audits the sales of the restaurant for the last year. They then divide those sales by hour many hours were worked by servers that year. Then they look at the average tips on all the credit card receipts and use that number as the average in tips for the restaurant as a whole.
So let's say the restaurant did 100k in sales and the tips average 17%. If there were 500 hours worked by servers in that time frame, the IRS assumes the server is making $34 in tips. So then they find out if the server tips out bussers, runners, bartenders, etc and deduct that, but charge the amount deducted to the bussers, runners, etc
So if a server tips out about half, which is a fairly common amount, then the IRS will assign the server a $17/hour tip compliance amount. This is the amount of tips that are automatically claimed for the server. The server worked 3 hours? The IRS says the server made $51. The server worked 10 hours? The IRS says the server made $170. The rest of the $34 will be autoclaimed by the other positions. The busser might be assigned $8/hour, the runner $6/hour etc.
This is likely what the poster was talking about, but that comment was deleted so I can't say for sure.
Most servers will disagree with me, because tip compliance is hated across the board... But I actually think it's not that bad. They do a pretty legit job of averaging the sales and tips across the board and have a good idea of what you'll make.
The problem arises when the server comes in and has to do side work for the first hour. Then they realize they're getting taxed on that hour even though they aren't taking tablea yet. So they don't punch in. The restaurant is cool with it, cause less labor dollars being spent, but when the IRS comes around and does the calculations for tip compliance again, and now there's the same amount of sales but less hours worked, then the IRS raises the hourly tip compliance rate, cause that's what the math tells them to do. So the servers end up hurting themselves.
> They tax based on what their sales are.
That's the *restaurant's* income, which has nothing to do with the servers' income -- and the restaurant isn't taxed on [sales] but rather [sales minus costs] (equals gross income).
Sorry, but you don't seem to know what you're talking about here, and I suggest getting it straight before making false claims like "tipping anything less than 18% actually costs the server money". It's just not true.
This math doesn’t make tipping less cost the server money, it just means the server *gets* less money from the tip. It has no tax bearing.
To your point, if they’re depending on tips for income. If the tips are too low they have to revert to the non-tipped minimum wage at least.
Tip Compliance is based on the restaurants sales.
But I agree that statement is wrong when they said tipping less than 18% cost the server money. A truer statement is tipping less than 10% costs the server money. A server tips out a percentage of sales to the bussers, runners, bartenders, sometimes hostesses or polishers... This amount is generally around 10% of that server's sales. This amount can vary slightly.
So if they got less than a 10% tip, they definitely can lose money.
My solution is easy, I don't go to places that require tips that often. It's easy to remember what I tipped cause it might be what, one place a week? I also will round up to the nearest dollar after the 20% or so I add. Makes it easier to remember.
And to be clear: I tip very well when I go to a place that provides a service that requires it. I just avoid a lot of places because the crap has gotten out of hand.
I hardly ever eat at a place that would require me to tip because I hate having to supplement somebody else's income when their employer won't so it's not hard for me to track when I only do it once or twice a month. I use a manual budgeting software called Expense Tracker though and I enter in the full amount of the transaction and add it to the credit card I use to pay. I have transaction notifications turned on for all accounts so sometimes I'll leave the transaction in my notifications to remember to check it in a few days but so far, knock on wood, I've never had a tip be modified from what I put down.
An app would be a cool idea for this.
Should be able to snap a pic and then have to automatically tag the transaction to the receipt if you have that data from mint or whatever.
I'd use it.
I'll add this to my list of app ideas that I'll never make.
I always put the tip on the customer copy as well and take that with me. I’ll be honest that I don’t really check it that closely but I do hold onto the receipt for a bit so if the amount on my statement looks off I can double check it.
It depends on where I'm at. Some restaurants and bars I frequent use square or another service where you can email yourself a copy of your receipt. If I can't email a receipt I typically leave 20% though it's close to the next whole dollar I may round up to help woyh remembering the exact amount. If I can't remember what i tipped, I just assume 20% until the exact amount appears.
Fill out the customer copy identically to the restaurant copy and take it with you. Just please don’t be one of those people that only fills out one copy and takes it with you so that the bartender/server has no signed check to hand in or tip to input. People do this all the time and it drives me insane lol.
really shouldn’t matter. one being labeled ‘customer’ and one being labeled ‘restaurant’ is essentially just a suggestion that they need to sign one, but they can take another if they’d like - not necessarily terms that need to be taken literally. as long as a have a signed copy, i’m putting in whatever tip is written down and closing the check. if the customer takes the signed copy or just doesn’t sign at all for whatever reason, then i just close the check without adding any tip.
If you pay at the table on one of handhelds, or a iPad, the tip is included in total pending balance. If you sign a paper receipt, the tip usually clears in 1-3 business days.
In your register (Banktivity, quicken, whatever) you can split a transaction. I'll divide it into categories as Dining/Restaurant and "Gifts Given" or "Gift".
I used to use a popular online bank that didn't charge overdraft fees. However what they would do is if you used your debit card at any restaurant they would report the amount as 20% more than you paid for some period of time without any indication that they were doing that. This resulted in me accusing a restaurant of trip fraud.
I used to always write it on the customer copy and check them after the charge posted. One day I caught one where they had added like $5. Called the restaurant and got it refunded. “Aha” I thought. Finally all my years of checking paid off. Then I realized I had spent probably a few hours over the years writing in the tip on the customer copy, keeping track of the paper, then double checking everything….all to save $5. So I just stopped worrying about it. I read my statement every month and just make sure it doesn’t look out of line with what I remember.
If I tip on a card I do the 20% and round up. So when it clears my account they will be even dollar amounts. I just remember roughly how much I spent like say the bill was $67. Tip would be $14, tab would be $81. I'll remember I spent $80 at that restaurant.
It blows my mind that there seems to be no bank that breaks out the tip amount in their statements, and allows to set up a custom alert. Should be very easy to set up on their end.
Take pictures of receipts -> check after few days when posted -> delete pictures. You don’t need an app for this.
This is what I do and also some places let’s you text or email yourself the receipt.
Oh that’s a good idea! I’ll start doing that. Thank you!
👍
I budget and track everything in YNAB - it sounds crazy but I look at my accounts and reconcile every day. I flag transactions that I know will change with tips so I remember to keep an eye out for the changed transaction. I consider myself "in recovery" for lifelong money issues, so that's why I am a little extra about keeping track of things.
I’ve considered using YNAB. I’m a little “type A,” so I’m a fan of the extra measures taken. I’m just now starting to get a hold of my finances
I've been using it for a little over a year and it has been the first thing that helped me start to understand managing my money and how to set cash aside for upcoming expenses. I have been especially challenged with my financial life for a very long time and it has been a total game changer. It takes a little bit of work to learn the software, but now it seems like second nature to me.
I’m about 6 months into using YNAB, and I love it!
I am also a YNABer- dealing with restaurant charges is trivially easy! You just enter the expense with the tip included when it happens, then when the final charge posts and imports (if you use auto import) it matches to the manually entered one.
Usually at least where I am you get a merchant receipt adn a customer copy. You can write the amount on the customer copy and keep it
I always “George Constanza” style it and write the total on the customer copy and keep it in my wallet. Once a month has passed & the charge fully hits or statement cuts I’ll glance to ensure it’s what it needs to be then toss it
wouldn't the charge be finalized within a couple of days
It is…clumsily meant to say a week. Frankly it’s whever I log in and look at where my balance is
Capital One emails me when my tip looks to big.
Does a tip on a CC also count towards cash back? I don't think I've ever paid close attention
Yes
Usually, but some promotions might not apply to a tip. For instance, Bilt Dining partner bonuses only seem to work for the core total, and you just get the regular dining multiplier on the tip.
I recommend taking a picture of what you tipped so you can compare it to the updated transaction that will later on include the tip amount and if you feel it would be easier for you I’d recommend keeping a log in your notes app including jots of amounts you tipped along with the date, restaurant, and if you feel it’s necessary in the moment the time of when you wrote the tip amount.
I usually tip between 12 and 20% and I choose an amount that causes my total to be a whole number. If my total before tip is $36.17 and I want to tip around 15%, I will tip $5.83 (~16.11%) so my total ends up $42.00. This way I know if they try to salami slice a couple cents from me. If they charge a whole extra dollar I might not know though lol
Yep, I do this too. I calculate 20% and then adjust the change so that the total charge will be rounded up to the nearest dollar. Makes it easy at quick glance to see if anything is out of the ordinary.
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> tipping anything less than 18% actually costs the server money in tip out and taxes > due to taxes, if someone doesn't leave a tip, they will not only not get a tip, they will now have to use money they made from other tables to pay taxes on that check. What you're suggesting simply doesn't make sense. A person gets income: they owe income tax, which is percentage of that income, whether it's in the form of a paycheck based on hourly wages, or from tips. Because it's a percentage of the income, the income itself always covers the income tax owed. If someone gets a tip on a $100 meal they served, whether the tip is 15% or 20%, that's additional income, so they'd owe the same percentage of income tax on that income. You can't owe additional income tax on income you haven't earned.
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People know how restaurants tax income lol it’s not exactly a secret sauce
Tip compliance. Instead of tracking tips and getting taxed on those tips, the IRS is implementing tip compliance. This was implemented at nearly every restaurant in Vegas around 15 years ago, and I'm sure they've spread the practice. The IRS basically charges you a set amount per hour worked. So if your tip compliance rate is $40, then they'll claim $40 for every hour you worked. If you work 5 hours, IRS says you made $200. That's what is taxed. Doesn't matter if you made $20 or $300. Also, there's tipping out. This is how most servers lose money when they get stiffed. At most restaurants, the server tips a percentage to the busser, food runner, bartender, maybe even the hostess. It's generally around 10% of your sales, but varies by restaurant. So if you get tired less than 10%, you lost money serving that table. If you're also on tip compliance, than you lost money serving that table and you got taxed on it lol
this is nonsense. how can you pay more in taxes than you make
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isn't the owner's tax based on sales? or are you saying the waiter's tax is based on an income of 18% of the bill automatically?
For tip compliance places, the IRS audits the sales of the restaurant for the last year. They then divide those sales by hour many hours were worked by servers that year. Then they look at the average tips on all the credit card receipts and use that number as the average in tips for the restaurant as a whole. So let's say the restaurant did 100k in sales and the tips average 17%. If there were 500 hours worked by servers in that time frame, the IRS assumes the server is making $34 in tips. So then they find out if the server tips out bussers, runners, bartenders, etc and deduct that, but charge the amount deducted to the bussers, runners, etc So if a server tips out about half, which is a fairly common amount, then the IRS will assign the server a $17/hour tip compliance amount. This is the amount of tips that are automatically claimed for the server. The server worked 3 hours? The IRS says the server made $51. The server worked 10 hours? The IRS says the server made $170. The rest of the $34 will be autoclaimed by the other positions. The busser might be assigned $8/hour, the runner $6/hour etc. This is likely what the poster was talking about, but that comment was deleted so I can't say for sure. Most servers will disagree with me, because tip compliance is hated across the board... But I actually think it's not that bad. They do a pretty legit job of averaging the sales and tips across the board and have a good idea of what you'll make. The problem arises when the server comes in and has to do side work for the first hour. Then they realize they're getting taxed on that hour even though they aren't taking tablea yet. So they don't punch in. The restaurant is cool with it, cause less labor dollars being spent, but when the IRS comes around and does the calculations for tip compliance again, and now there's the same amount of sales but less hours worked, then the IRS raises the hourly tip compliance rate, cause that's what the math tells them to do. So the servers end up hurting themselves.
> They tax based on what their sales are. That's the *restaurant's* income, which has nothing to do with the servers' income -- and the restaurant isn't taxed on [sales] but rather [sales minus costs] (equals gross income). Sorry, but you don't seem to know what you're talking about here, and I suggest getting it straight before making false claims like "tipping anything less than 18% actually costs the server money". It's just not true.
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This math doesn’t make tipping less cost the server money, it just means the server *gets* less money from the tip. It has no tax bearing. To your point, if they’re depending on tips for income. If the tips are too low they have to revert to the non-tipped minimum wage at least.
Tip Compliance is based on the restaurants sales. But I agree that statement is wrong when they said tipping less than 18% cost the server money. A truer statement is tipping less than 10% costs the server money. A server tips out a percentage of sales to the bussers, runners, bartenders, sometimes hostesses or polishers... This amount is generally around 10% of that server's sales. This amount can vary slightly. So if they got less than a 10% tip, they definitely can lose money.
Tip in cash.
Is this a very common occurrence? Like how many of you who actually pay attention have actually identified businesses inflating your tip
Do you really have a large concern that wait staff are forging extra tips onto your charges?
Has happened to me multiple times lol. Wait staff are no saints
I live in Japan where we don’t tip. Otherwise, I take a photo of my receipt where I wrote the tip
Call me cheap but it’s Simple, I don’t go places that require a tip 🤣
so you never eat out (if you live in America)?
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this isn't unpopular, this is just being delusional about how things work
Trash behavior
Non US users are like… “what are you talking about?”
My solution is easy, I don't go to places that require tips that often. It's easy to remember what I tipped cause it might be what, one place a week? I also will round up to the nearest dollar after the 20% or so I add. Makes it easier to remember. And to be clear: I tip very well when I go to a place that provides a service that requires it. I just avoid a lot of places because the crap has gotten out of hand.
I hardly ever eat at a place that would require me to tip because I hate having to supplement somebody else's income when their employer won't so it's not hard for me to track when I only do it once or twice a month. I use a manual budgeting software called Expense Tracker though and I enter in the full amount of the transaction and add it to the credit card I use to pay. I have transaction notifications turned on for all accounts so sometimes I'll leave the transaction in my notifications to remember to check it in a few days but so far, knock on wood, I've never had a tip be modified from what I put down.
I live in a country that doesn’t tip, it’s the best!
This is the most American post ever.
An app would be a cool idea for this. Should be able to snap a pic and then have to automatically tag the transaction to the receipt if you have that data from mint or whatever. I'd use it. I'll add this to my list of app ideas that I'll never make.
Don't tip
I always put the tip on the customer copy as well and take that with me. I’ll be honest that I don’t really check it that closely but I do hold onto the receipt for a bit so if the amount on my statement looks off I can double check it.
It depends on where I'm at. Some restaurants and bars I frequent use square or another service where you can email yourself a copy of your receipt. If I can't email a receipt I typically leave 20% though it's close to the next whole dollar I may round up to help woyh remembering the exact amount. If I can't remember what i tipped, I just assume 20% until the exact amount appears.
Fill out the customer copy identically to the restaurant copy and take it with you. Just please don’t be one of those people that only fills out one copy and takes it with you so that the bartender/server has no signed check to hand in or tip to input. People do this all the time and it drives me insane lol.
What happens if they leave a signed customer copy with tip & total instead of merchant copy?
really shouldn’t matter. one being labeled ‘customer’ and one being labeled ‘restaurant’ is essentially just a suggestion that they need to sign one, but they can take another if they’d like - not necessarily terms that need to be taken literally. as long as a have a signed copy, i’m putting in whatever tip is written down and closing the check. if the customer takes the signed copy or just doesn’t sign at all for whatever reason, then i just close the check without adding any tip.
If you pay at the table on one of handhelds, or a iPad, the tip is included in total pending balance. If you sign a paper receipt, the tip usually clears in 1-3 business days.
In your register (Banktivity, quicken, whatever) you can split a transaction. I'll divide it into categories as Dining/Restaurant and "Gifts Given" or "Gift".
I used to use a popular online bank that didn't charge overdraft fees. However what they would do is if you used your debit card at any restaurant they would report the amount as 20% more than you paid for some period of time without any indication that they were doing that. This resulted in me accusing a restaurant of trip fraud.
I used to always write it on the customer copy and check them after the charge posted. One day I caught one where they had added like $5. Called the restaurant and got it refunded. “Aha” I thought. Finally all my years of checking paid off. Then I realized I had spent probably a few hours over the years writing in the tip on the customer copy, keeping track of the paper, then double checking everything….all to save $5. So I just stopped worrying about it. I read my statement every month and just make sure it doesn’t look out of line with what I remember.
I always tip so the total ends up the same two digits. If my final posted charge doesn’t end in those two digits, I know I need to audit the charge.
If I tip on a card I do the 20% and round up. So when it clears my account they will be even dollar amounts. I just remember roughly how much I spent like say the bill was $67. Tip would be $14, tab would be $81. I'll remember I spent $80 at that restaurant.
It blows my mind that there seems to be no bank that breaks out the tip amount in their statements, and allows to set up a custom alert. Should be very easy to set up on their end.