Tax on Eating Out

[Tiny]

The "how often to you eat out thread" and the fact that it's tax time - got me to wondering:

How much tax are you paying on your 'take out food'?     -- Here it's 10% to 14%  (groceries are 2.5% I think..)

And then if you feel up to it - how much are you tipping  and how does the tax and tip compare to the cost of the meal?


Tax on a $50 tab would be $5.00 (minimum - I'm going with the 10%), add in a 15% tip that's another $7.50--- so tax and tip are adding 12.50 to the final bill (in my neck of the woods).       It really is expensive to eat out around here.

[swamp]

just the normal sales tax, 8%.

Food in the grocery store is not taxed.

[Cookies Galore]

6% sales tax (8% in Philly), though a lot of bars include the tax in the price of drinks (easier to think!). 20% tip on the total bill.

ETA: oops, you said take out. I only tip with dine in service. Groceries aren't taxed (aside from stuff like soda or prepared foods).

[Gardening Grandma]

Groceries arent taxed, but eating out the tax on service is 9%. With a 20% tip, that's nearly 30% that gets added to the bill.

[cronewitch]

I have been over tipping lately and noticed ISO did too last time. We had food come to $23 including 10% tax and he tipped $10. I decided to over tip as a form of charity. So adding a few extra dollars won't hurt me and might help someone. Where we have gone the last couple of times is a off the freeway diner, not excellent food but by his house in the middle of nowhere. I don't think the staff makes much so an extra $5 might help them. Besides I am betting if we go there again they will start to remember us.

[sarcasticgirl]

I have no idea how much the tax is for restaurants. 

Groceries are taxed

I do generally tip 20% for good service, sometimes more... 

I don't tip for takeout

[TrixAre4Kids]

Feb 27, 2014 14:42:50 GMT -5 Tiny said:

      It really is expensive to eat out around here.

What state are you in?

[drivingaround]

It is expensive, our waitstaff are paid regular minimum wage NOT service industry minimum wages.  Tax is 9.5% then tip 15 - 20%.  That's why I can't get over that going out for two burgers, no drinks or sides, is almost $40.  I just can't believe how expensive it is.  Not even fancy high end place just your regular burger bar fare.  Well, not Denny's either.  My locale is missing affordable options that aren't chain restaurants.

[Gardening Grandma]

Feb 27, 2014 21:17:01 GMT -5 @sroo4 said:

Why would you tip on top of standard minimum wage?  

Because it is the right thing to do.  I'm a good tipper because my first job out of high school was as a waitress.  I got fired after 3 weeks because I really was a terrible waitress.  But I respect how hard they work and how it is much harder than it seems.

[drivingaround]

Feb 27, 2014 21:17:01 GMT -5 @sroo4 said:

Why would you tip on top of standard minimum wage?  

Why would I not?  They're still providing a service, I'd be ashamed to leave a sit down restaurant without leaving a tip.  Well, assuming the waiterstaff did a fair job.  The restaurant isn't generously paying them standard minimum wage, my state mandates it.  The plus side is we have a fair minimum wage, $9.32/hour.  People can work in the service industry, earn a decent salary and keep the economny thriving.  As I noted sales tax is 9.5% so that is why for my area it is just expensive to eat out.

[Tiny]

Feb 27, 2014 19:48:47 GMT -5 TrixAre4Kids said:

Feb 27, 2014 14:42:50 GMT -5 Tiny said:

      It really is expensive to eat out around here.

What state are you in?

I'm in Illinois and work in Chicago (which has taxes above and beyond other areas of Illinois...

www.ehow.com/info_8729101_tax-restaurant-food-illinois.html

It's pretty complicated... but it looks like the downtown tax on restaurant food is 11%.   My recent purchase of a 1.25 Chocolate Chip cookie cost $1.38 from the company Cafeteria/Café.     I don't think I earn as much as my coworkers... they go out for lunch every day (for the record they are also all Double Income Professionals so they do indeed have atleast 2 times the income I have as a Single income... see!  I am 'poor'!!   )

 

[Miss Tequila]

I don't tip on take out food. We have 6% sales tax on all prepared food.

I thought the reason we are forced to tip is because the wait staff make below minimum wage? If they are making minimum wage I do not believe you would be required to tip. If so, I would be tipping less than the 20% that i usually tip.

[taz157]

Feb 28, 2014 5:58:42 GMT -5 Miss Tequila said:

I don't tip on take out food. We have 6% sales tax on all prepared food.

I thought the reason we are forced to tip is because the wait staff make below minimum wage? If they are making minimum wage I do not believe you would be required to tip. If so, I would be tipping less than the 20% that i usually tip.

Yeah that!

[marvholly]

I just went out to dinner w/a friend on Wed. Tax was 9% but this can vary from town to town in my suburban Chicago area from 9% to 10%, same tax is true for carry out, fast food or prepared food in the grocery deli.

Groceries are taxed everywhere at 2.25% including frozen meals.

I tipped $8 (16% of base bill before tax). I do NOT tip for fast food or at carry out only places, i low (10%)tip at REAL restaurants for carry out or at buffet type places.

If minimum wages go to the $10/hr being talked about (and the comensurate price increases) I WILL be rethinking and VERY likely adjusting (down) my tipping practices.

[zibazinski]

No one tips on top of a. High minimum wage unless they're from out of state and don't know any better. In Oregon most people will leave a couple of extra bucks but a lot don't. Oregon servers love out of state idiots!

[Deleted]

I found this interesting.

money.cnn.com/2014/02/27/news/economy/obamacare-restaurants/index.html

A chain in FL is adding a 1% Obamacare tax. Actually, I'm happy to help pay for insurance for the staff, but just put it in the prices as an increased cost because you're taking better care of your employees.

[Gardening Grandma]

Feb 28, 2014 9:05:26 GMT -5 @sroo4 said:

Feb 27, 2014 22:35:10 GMT -5 drivingaround said:

Why would I not?  They're still providing a service, I'd be ashamed to leave a sit down restaurant without leaving a tip.  Well, assuming the waiterstaff did a fair job.  The restaurant isn't generously paying them standard minimum wage, my state mandates it.  The plus side is we have a fair minimum wage, $9.32/hour.  People can work in the service industry, earn a decent salary and keep the economny thriving.  As I noted sales tax is 9.5% so that is why for my area it is just expensive to eat out.

Well it doesn't matter why they are making minimum wage... if they are, then tipping is no longer 'required'.  I am not anti-tipping (just the opposite in fact).  I just disagree with minimum wage for service, as do many many people in the service industry, because in the long run it's more lucrative to have the adjusted/service min wage + tips. 

If the min wage is the standard... I'm already paying for that difference in the cost of my meal.   I would not feel compelled to add extra money as a tip.   



What's that saying about cake and eating?

You ARE aware that the server pays income tax on tip income whether they receive it or not, right?  So, if you don't leave a tip, you are forcing the server to pay taxes on income they did not get.  Nice!

[NomoreDramaQ1015]

So, if you don't leave a tip, you are forcing the server to pay taxes on income they did not get

Wrong.  If you do not make the required % of tips in a night (I think it's 10% on sales per the IRS) then by law the resturant must make up the difference in your paycheck.  They can't just not pay you, you must average out to at least the minimum per hour.  If they do not the IRS comes a knockin.

There is A LOT of under reporting going on by servers.  Credit card tips are automatically recorded but cash has to be input by hand.  I know a lot of people who only reported the minimum to keep from being audited and pocketed the rest.  That's why serving can be so lucrative.

Drove me crazy because I can't do that with my full time job, every penny I make is taxed.  Personally I'd like to see tipping going away so servers will have to pay their "fair share" like the rest of us.

[wyouser]

Tax here is 6%. Tip usually 15% to 20%. There are a lot of restaurants around here that pay well under the current minimum wage because tips are expected. A good waitress will make way more than the minimum wage. Tipping is just expected around here. 

[thyme4change]

I don't tip if I have stand up at any time to get my food - including standing in line to order, or going to the counter when they call my name.  I am not sure what the rules are, so that is the rule I made up myself.  

Huh? Don't servers normally declare their tips?

The IRS assumes that there are tips that are equal to 8% of the food server's total sales, unless the server voluntarily declares a higher amount.  So, even if one person stiffs a server, it is likely they are still getting enough tips from others that it will all even out in the end.  I would think that people who aren't full-fledged waiters don't call themselves servers, and therefore aren't paying taxes on that additional 8%.  Like, the guy who works the counter at the pizza place is most likely considered a cashier, so not giving him a tip every time I pick up a pizza isn't likely costing him money.

[NomoreDramaQ1015]

Perhaps the servers should lobby to go back to the service minimum wage.
And have to report all their income? 

I'm not saying every server on the planet under-reports but you can make a killing by claiming just enough to make the IRS happy and pocketing the rest of your tips under the table.

I have to refrain from rolling my eyes during "Poor victimized server" speeches.  You have no clue what's going on behind the scenes. 

[NomoreDramaQ1015]

I also know that most servers don't want to go to a non-tipping model because like I said upthread they end up making less.

I would have loved it.  The endless bitching and fighting over tables percieved to be better tippers was annoying.  Just do your damn job already!

One of the many reasons I don't work as a server anymore.

[Gardening Grandma]

Feb 28, 2014 11:28:54 GMT -5 @sroo4 said:

Feb 28, 2014 11:22:07 GMT -5 Gardening Grandma said:

You ARE aware that the server pays income tax on tip income whether they receive it or not, right?  So, if you don't leave a tip, you are forcing the server to pay taxes on income they did not get.  Nice!

Huh?  Don't servers normally declare their tips?

The IRS determines what the server is expected to declare.  If the amount the iRS determines is the "right" amount (even if it is less than what the server actually received) they levy the income tax on the iRA's number, not the actual amount.  So if you choose to stiff your server, he/she may have to pay income tax on money they did not receive.

[Gardening Grandma]

Feb 28, 2014 12:16:05 GMT -5 @sroo4 said:

Feb 28, 2014 12:14:14 GMT -5 NomoreDramaQ1015 said:

I also know that most servers don't want to go to a non-tipping model because like I said upthread they end up making less.

I would have loved it.  The endless bitching and fighting over tables percieved to be better tippers was annoying.  Just do your damn job already!

One of the many reasons I don't work as a server anymore.

But if GG has her way there would still be tipping,  so the bitching would still be there   

No, If GG had her way, servers would be paid realistically making tips unnecessary.  Or we could go to the European model where a service charge is automatically added to the bill.

[drivingaround]

Feb 28, 2014 9:18:39 GMT -5 zibazinski said:

No one tips on top of a. High minimum wage unless they're from out of state and don't know any better. In Oregon most people will leave a couple of extra bucks but a lot don't. Oregon servers love out of state idiots!

This is not true in metro area of Washington, my friends and I ate out a lot, lived here 25+ years, some even worked in service industry.  Never have people not tipped due to the high minimum wage.

[Miss Tequila]

Feb 27, 2014 22:35:10 GMT -5 drivingaround said:

Feb 27, 2014 21:17:01 GMT -5 @sroo4 said:

Why would you tip on top of standard minimum wage?  

Why would I not?  They're still providing a service, I'd be ashamed to leave a sit down restaurant without leaving a tip.  Well, assuming the waiterstaff did a fair job.  The restaurant isn't generously paying them standard minimum wage, my state mandates it.  The plus side is we have a fair minimum wage, $9.32/hour.  People can work in the service industry, earn a decent salary and keep the economny thriving.  As I noted sales tax is 9.5% so that is why for my area it is just expensive to eat out.

The cashier at your local store most likely makes minimum wage. Do you tip her, too?

[Phoenix84]

I haven't paid that much attention to the tax.  My assumption is that they charge the normal sales tax rate for eating out.

As far as tip goes, I generally take 10 % and round up to the nearest dollar, so it ends up being about 15%.  Since I always eat out alone, my meals aren't anywhere close to $50.  The most it ever is is about $30, in which case I'd likely give a $4-$5 tip.

[Gardening Grandma]

Feb 28, 2014 17:17:29 GMT -5 Miss Tequila said:

Feb 27, 2014 22:35:10 GMT -5 drivingaround said:

Why would I not?  They're still providing a service, I'd be ashamed to leave a sit down restaurant without leaving a tip.  Well, assuming the waiterstaff did a fair job.  The restaurant isn't generously paying them standard minimum wage, my state mandates it.  The plus side is we have a fair minimum wage, $9.32/hour.  People can work in the service industry, earn a decent salary and keep the economny thriving.  As I noted sales tax is 9.5% so that is why for my area it is just expensive to eat out.

The cashier at your local store most likely makes minimum wage. Do you tip her, too?

The IRS doesn't expect the cashier to declare tips.  Hardly a valid comparison.

[zibazinski]

I'm just saying I don't tip hugely in states that have their servers make a huge minimum wage. No one I know does. States that don't pay huge minimum wage, I tip very well. Btw, the states with huge minimum wages have very expensive food when you eat out. Breakfast that would be $5-6 is now $8-9 for same food so owners are passing on their costs, as they should. It always shocks me to eat breakfast out in a high minimum wage state because I'm used to el cheapo breakfasts!

[Gardening Grandma]

What's a "huge" minimum wage?