Shouldn't we be able to deduct tips left at restaurants from our taxes, as they are someone's salary?

Question

A tip you leave at a restaurant is the server's wages. In fact, it even gets taxed. So basically tips are taxed twice, from the tipper and the tipee.

Answer 1

But then you would have to start deducting for everything you purchase, because ultimately the money you spend on, lets say your computer, goes toward the salary of the guy making it and selling it (part of the cost). Where would it stop?

Answer 2

By that logic, I should be able to deduct part of the price of the meal. Where do you think the rest of their pay comes from? The same argument could apply to everything I spend. Everyone's pay comes out of the price of a product or service purchased from their employer. This would make ALL income tax go away.

Answer 3

I don't follow your reasoning.

If you are an employer and pay a salary to someone, that's tax deductible as a cost of running your business. But not when you're getting personal services.

By your reasoning, most of the cost of essentially everything you buy would be deductible. You pay taxes on what you make, and if you buy something with it and part of the cost of what you buy pays someone's salary, then they pay taxes on that part.

Answer 4

If this is a deductible business meal, the tip is also deductible subject to the 50% limitation.

If it's a deductible employee business expense meal, the tip is deductible along with the meal.

If it's not a deductible meal, it's no more deductible than the meal is, and that's paying several people's wages if you think about it.

Answer 5

Part of the cost of your meal is ALSO part of the server's salary, just as part of the cost of your oil change is someone's salary. No, this is not, and should not be deductible by anyone other than one who is eligible to use the cost of the meal and service as a legitimate business expense.

Answer 6

Um, no. Unless you're deducting it as part of a meals expense for your business, you can't. And even meals are subject to a 50% limitation. Nice try, though... kind of.

Answer 7

Depending on how you structure your finances you can deduct tips from your taxable income along with a host of things that most people never take advantage of as part of their deductions when filing their taxes. For example, I can show you how to write off your housing and auto expenses which are easily the two largest expenses for most Americans. Whoever it was that said ignorance is bliss was a moron. Ignorance is extremely painful - unless you prefer the life of a rat going nowhere fast around a spinning wheel.

Answer 8

if you're in enough trouble financially that you actually worry about whether or not your three dollar tip is taxed twice by the government, sell your computer and make some cash.

Answer 9

I agree. Unless you bought a 1500 dollar meal, who gives?

Answer 10

All income is taxed no matter how many times it becomes someone else's income. You aren't even making sense.

It's only taxed once per each person. Yes, at one time it was the customer's income and they were taxed for it.

Now it is your income and you are taxed for it. People paying other people is how income is made... silly.