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[quote user="John WR"] Whether a tip is a gratuity or part of a wage payment is ambiguous.  While some people do consider tips optional the Internal Revenue Service does not and requires that taxes be paid on them.   There may be a reason for the lack of "exceptional service."  Just as you assess the value of the service so to do service personnel assess the probability that exceptional service will be rewarded.  This is true not only on Amtrak but in all areas of life where tipping is customary.   I agree with those who prefer the system in New Zealand and other countries where tips are built into employee salaries.  However, that is not the case in the U.S. [/quote] As per IRS 1040 Instructions, as well as IRS Publication 531, wages and tips are separate items, although they are reported on the same line, as is also true for salaries. Tips, for example, are not restricted to cash. They can be in the form of tickets, passes, etc.  Moreover, if the customer puts it on the table or adds it to the bill, it is a tip.  If the service provider adds it to the bill, it is part of wages. The burden of reporting tips falls most heavily on the service person; employers assume the burden of reporting wages and salaries. There are some exceptions. In any case, persons in occupations that depend on tips are saddled with onerous IRS record keeping requirements.
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