As someone who works in payroll for a restaurant chain, I can confirm that your manager is absolutely giving you false information. This is unfortunately a very common tactic we see managers use to prevent good hosts from transitioning to serving roles. The reality is that tips are taxed as ordinary income at your regular tax rate - typically 10-12% federal for someone making $12/hour, plus 7.65% for FICA taxes, plus state taxes if applicable. So you're looking at roughly 20-25% total tax rate, meaning you keep 75-80% of every tip dollar. Here's what actually happens with your paychecks: Your employer reports your credit card tips automatically, and you're supposed to report cash tips. The restaurant then withholds taxes on both your hourly wage and reported tips. Many servers find that their $2.75/hour base wage isn't enough to cover all the withholding on tips, so they either owe at tax time or request additional withholding. But even accounting for taxes, servers consistently out-earn hosts by a significant margin. I've processed thousands of paychecks and can tell you that servers typically make 1.5-2x what hosts make, even after all taxes are considered. Your manager is prioritizing their own convenience over your financial growth. I'd recommend pushing back professionally - good hosts are valuable, but that doesn't mean you should be kept from advancing your career with tax misinformation.

Your manager is absolutely lying to you - this is one of the most common myths in the restaurant industry! I've been serving for over 4 years and can tell you definitively that while you do pay taxes on tips, you keep the vast majority of that money. Here's the real math: Tips are taxed as regular income at your normal tax bracket (probably 10-12% federal for someone making $12/hour), plus FICA taxes (7.65%), plus state taxes if applicable. So you're looking at roughly 20-25% total taxes, meaning you keep 75-80% of your tips PLUS your $2.75 hourly base wage. On a typical busy shift where I make $200 in tips, I pay about $45 in taxes and keep $155 from tips alone - that's way more than I'd make hosting for the same hours at $12/hour. Even on slow nights when I only make $80 in tips, I still take home around $60 from tips plus hourly, which usually works out to $18-20/hour total. The reason your manager is telling you this is simple: good hosts are harder to find and train than servers, so they'd rather keep you where you are with tax misinformation than deal with hiring and training a replacement. It's purely for their convenience, not your financial benefit. I'd recommend being direct but professional - tell them you've researched the tax implications and you're comfortable with them, and you'd like to start server training as soon as possible. Most managers back down once they realize you know the tax excuse is complete BS. Don't let them cap your earning potential with lies about the tax code!

Thanks for all the helpful advice everyone! I'm leaning toward putting $6,000 for the child tax credits instead of the full $8,000 to ensure I get that refund. Just to make sure I understand - when I file my actual tax return next year, I'll still claim all 4 kids and get the full $8,000 credit regardless of what I put on the W-4, right? The W-4 just affects how much they take out of my paychecks during the year? Also @Emma Johnson, thanks for the tip about checking the box in Step 2(c) since my spouse doesn't work - I definitely would have missed that!

One more thing to consider - since you mentioned your household income is around $135K, you should be aware that the Child Tax Credit starts to phase out at $150K for married filing jointly (in 2025). You're well under that threshold, so you'll get the full $2,000 per child, but it's something to keep in mind if your income increases in future years. Also, with 4 kids, don't forget you might be eligible for the Child and Dependent Care Credit if you have any childcare expenses (even though your spouse stays home, you might have summer camps, after-school care, etc.). That's another credit that could affect your overall tax picture, though it won't change what you put on the W-4 since that credit can't be anticipated in withholding. Your plan to put $6,000 instead of $8,000 sounds solid for getting that refund you're looking for!

Just wanted to share my experience since I had this exact same question a few months ago! In my case, "Medical EE - SR" stood for "Medical Employee - Standard Rate" which was my contribution to the company health insurance plan. What really helped me was requesting a detailed breakdown of all deductions from payroll. Most companies are required to provide this if you ask, even if it takes them a while to respond. They sent me a document that explained every single code on my pay stub, which was super helpful for understanding not just the medical deduction but also things like life insurance, disability, and other benefits I didn't even know I had. The $87.50 biweekly amount sounds about right for employee-only standard tier coverage. One thing I'd suggest is making sure you're actually using the benefits you're paying for - I discovered I was paying for dental coverage that I never used because I already had dental through my spouse's plan. Saved me about $30 per paycheck once I dropped the duplicate coverage during open enrollment. If your HR is slow to respond via email, try calling them directly or stopping by in person if possible. Sometimes a quick 5-minute conversation can clear up what might take weeks of back-and-forth emails to resolve.

I had this exact same confusion when I first started working! "Medical EE - SR" typically means "Medical Employee - Standard Rate" and represents your portion of the health insurance premium that gets deducted from your paycheck. The "EE" definitely stands for "Employee" to distinguish it from employer contributions. One thing that really helped me understand all my deductions was downloading my pay stub and looking at it alongside my benefits enrollment materials. Most companies provide a benefits guide during onboarding that breaks down all the different plan options and their costs. If you can't find yours, definitely ask HR for a copy - it should show exactly what "SR" means at your specific company (could be Standard Rate, Senior Rate, or even Single Rate depending on your employer). The $87.50 biweekly amount seems very reasonable for employee-only health coverage. That works out to about $2,275 annually, which is actually on the lower end for decent health insurance these days. Just make sure you're enrolled in the plan that makes the most sense for your healthcare needs - sometimes people pick the middle-tier option without really comparing what they'd actually use versus the cost savings of a basic plan. If HR is being slow, try giving them a call directly rather than email. In my experience, a quick phone conversation often resolves these questions much faster than waiting for email responses!

I completely understand your concern about this situation, Jamal. Your instincts are absolutely right - what your neighbor is suggesting is tax evasion, plain and simple. Here's the bottom line: You're required to report ALL income, regardless of how you're paid. At $300 per job doing 2-3 jobs monthly, you're looking at roughly $1,800-$2,700 per year. This definitely needs to be reported on your tax return. Your neighbor also has obligations - if he's paying you as an independent contractor and it totals $600+ per year, he should issue you a 1099-NEC. If not, you still need to report it as "other income" on your return. My advice: Start tracking all payments from now on, set aside about 25-30% for taxes (income tax plus self-employment tax), and consider making quarterly estimated payments to avoid a big bill next April. You might also be able to deduct work-related expenses like tools or mileage. Don't let your neighbor's casual attitude toward taxes put you at risk. The "everyone does it" mentality doesn't protect you from penalties, interest, or potential criminal charges. Better to handle this properly from the start than deal with IRS problems later.

Just want to echo what others have said - your gut feeling is absolutely correct. This is tax evasion, not a "tax headache avoidance strategy." I work in tax preparation and see people in similar situations all the time. The "everyone does it" line is classic - it's what people tell themselves to justify risky behavior. But the reality is that unreported income catches up with you eventually, often when you least expect it. A few practical points for your situation: - Keep detailed records of all payments (dates, amounts, work performed) - You'll likely need to file Schedule C for this self-employment income - Don't forget about self-employment tax (15.3%) in addition to regular income tax - Consider quarterly estimated payments if this continues The peace of mind from doing things correctly is worth way more than the temporary "savings" from hiding income. Plus, as a legitimate business expense, your neighbor can actually deduct what he pays you - so there's really no good reason for him to want to hide these payments other than avoiding his own tax obligations. Better to have an honest conversation with him about proper documentation, or find a different side gig if he's unwilling to do things legally.

Tip from personal experience: whatever you do, FILE YOUR RETURN on time for 2024 even if you can't pay what you owe!! The penalty for not filing is WAY worse than the penalty for not paying. The failure-to-file penalty is 5% of unpaid taxes each month while failure-to-pay is only 0.5% monthly.

I feel your pain on this one! I went through something similar a few years back and learned the hard way that the IRS treats each tax year completely separately. You'll definitely owe taxes on your 2024 income even though you're using it all to pay back 2023 taxes. Here's what I'd strongly recommend based on my experience: 1. Set up an installment agreement for your 2023 debt ASAP - this will give you breathing room to handle your 2024 taxes properly 2. File your 2024 return on time no matter what, even if you can't pay immediately (the failure-to-file penalties are brutal) 3. Consider making quarterly estimated payments for 2024 if possible to avoid underpayment penalties The good news is that any interest you pay on your tax debt is deductible on Schedule A (though penalties aren't). Also, the IRS is surprisingly reasonable about payment plans if you're proactive about reaching out to them. Don't let this become a snowball effect - deal with both years separately and you'll get through this!