More and more people are paying with credit cards and debit cards because it is convenient and you can collect credit card rewards miles/points. But before you pay your restaurant bill with your favorite card I recommend at least paying your tip in cash.
Why pay in cash? It is very simple, when you pay with a credit card it is accounted for electronically and therefore Uncle Sam will almost always gets his cut.
When you pay with cash it is not as easily traceable and therefore not all tips are reported. Before you scream tax fraud, let’s be real, a lot of people don’t claim 100% of the tips they collect to the IRS. This is not only true for waiters/waitresses but just about any service job that accepts tips like cab drivers, tour guides, hotel workers, etc. I’m not saying it is right but that’s just the way it is.
Depending on their tax bracket you could be giving them a substantial bonus. Many people like to pay with credit cards and debit cards for convenience and for the rewards program. I do too, but if possible I like to just pay the food bill with a card and the tip with cash. I know my waiter or waitress will appreciate that.
Just something to think about next time you charge your entire lunch or dinner. Here a the kicker, if you don’t like the service leave a smaller tip and pay your tip with your credit or debit card, hehe. Another place I like to pay cash is local mom and pop stores for the same reasons above.
I am not promoting or suggesting tax fraud but believe me your favorite waiter or store owner will thank you.
Any waiters or waitress want to weigh in on this one?