What percentage of tips go unreported?

The standard minimum tip rate of 8% is in practice adjusted by the IRS in accordance with local demographics and statistics. Tip income has been scrutinized more than ever during the past five years. The IRS estimates that 84% of tip income, approximately $500 million each year, is never reported.



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If you fail to report your tips to your employer, the IRS can impose a penalty equal to 50% of the Social Security and Medicare tax you fail to pay.

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I find that attractive servers earn approximately $1261 more per year in tips than unattractive servers, a result that is both statistically and economically significant. The main driver of this beauty earnings gap appears to be female customers tipping attractive female servers more than unattractive female servers.

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