Inflation has finally gotten through to the Pennys.
They used to go to the laundromat change machine, and get quarters for tips.
Jeff…. and others… it’s kind of complicated…
but basically, employers report an employee’s tips to the IRS, based on tips added to the bill on cards, plus cash tips reported to them by the employee on a special form every month.
If employees illegally under-report their cash tips so the total, including on cards, doesn’t equal 8% of their sales, the restaurant reports it as 8%.
Whatever the amount, it’s taxed as income, and used as part of the base amount for social security withholding and later benefits
So… it depends on how you feel about wait staff under-reporting tips…. IF they do.
Some report every penny, and it makes no difference which way you tip…. some do report less than they actually received in cash…. so they may or may not pay taxes on whatever you give them above the 8% automatically counted.
Thus, if you’re the Pennys, they’ll end up having to pay taxes on an 8% tip even though you only gave then 3%….
because the IRS doesn’t believe it.
Leaving them cash gives them the choice, according to their own feelings, about paying taxes, including building social security and unemployment credits.
Most appreciate that, whether or not they’ll tell you so, or you approve of their reasons. Up to you.