So You Want To Be A Waiter

The best book on waiting tables that you have never read – yet

10% a waiter can get behind

Many waiters, especially new ones, don’t think about the fact that most waiters will owe money on April 15th to the IRS. Those of us who do tend to block it out throughout the year.

Why do we owe money at tax time? Why is a refund out of the question for most waiters?

The only place that tax withholding can take place for most servers is through the hourly wage. If you’re in a state that allows restaurants to pay you $2.13 an hour, you not only get $0.00 paychecks, you might not realize that you’re in the hole for withholding. In fact, the more tips you make, the further in the hole you get because the less taxes get withheld for that amount of income. The other thing that works against you is that Medicare and Social Security get taken out first. Whatever is left over is earmarked for Federal Income Tax withholding.

Here’s an example from my most recent paycheck (covers a two week pay period):

Tips: $1321.30

Hours at $2.13/hr  51.53 hours  $109.76

Training hours $6.55/hr (we get paid for mandatory meetings) 2 hours $13.10

I had a total of $122.86 in hourly wages.

Medicare – $20.73

Social Security – $89.54

Federal – $12.59!

As you can see, I ran out of hourly money. I was only able to get about 1% of my income withheld. Since most of us are going to owe between 10% – 15% of our gross wages after all deductions, it’s no surprise that most of us are going to owe between $1000 – $4000 at tax time. 

So now we come to the 10% figure quoted in the subject header.

Let’s say you make a hundred bucks in a shift. You should take a $10 bill from your wad of cash (or 10 ones if you want, but I’d save those for tomorrow’s bank) and put it in an envelope. If you make $40, put $4 aside. If you’re one of the rare people who can put money aside and not touch it during lean times, you’ll find that at the end of the year, you’ll have pretty close to what you need to pay the government. However, if you’re like the rest of us, you’ll probably want to make estimated quarterly payments to the IRS. You can call their hotline or go on line to get all of the details. They even have a new system of on-line electronic payment called EFTPS. You can literally make payments every single day if you want. You can even assign payments to specific years, but be careful – sometimes it’s hard to keep track of where you’ve put your money. The worst thing you can do, other than doing nothing, is to co-mingle that money with the rest of your money. Sure…you’re going to make a payment to the IRS next week from your bank account. Sure…you’ll put 20% in next shift because you want to have drinking money tonight. Right. Been there, done that.

Which brings us to “pay me first”. If you take the money and segregate it immediately, you won’t miss it or blow it when you go out with your friends.

I haven’t addressed those who live in states that require actual minimum wage like Washington State, California and the like (or states in the middle that pay $4 an hour). Not being privy to the actual figures, I can’t speak to specifics, but I’d suspect that it would be handy for waiters in those states to at least put aside 5% for taxes.

I also can’t speak to the specifics of those waiters who get paid by paycheck instead of taking money home with them daily. I’d assume that your withholdings are covered, but you need to ask your management. Or, you could look on your paycheck and if you see figures in the withholding block like the ones I quoted from mine, you can probably assume that you’re also not getting enough withholding taken out.

Finally, this is one reason that I chuckle to myself when I, or anyone else says, “I made $100 last night”. Not really – you only made $90. You should start getting in the mindset of mentally subtracting 10% from what you think you make. It’ll save your ass at tax time.

Just ask me.  I’ll tell you what a bummer it is to be paying the IRS $75 a month for last year’s taxes and having to pay an extra couple of hundred bucks in fees and penalties above what i would have owed. Yep, even old guys sometimes don’t ever learn.

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