Is there any advantage to holiday tipping as a group vs indivually?

Question

I'm just wondering tax-wise. My condo community wants to put together a holiday fund, which will collect thousands of dollars to distribute amongst the staff. We send a check to the organizer (whom I completely trust) and the staff will be given cash. I know the IRS considers tips income no matter what, and I'm sure not every recipient reports it accurately. Is there any difference by giving as a group or just handing out cash on your own?

Answer 1

There is no financial advantage or disadvantage to either method. There may be a psychological advantage, however, if you received uneven levels of service from the staff. Say there were 3 staff and 60 condos, with each condo contributing $60 for a total pool of $3,600. It is likely that the HOA will distribute the $3,600 equally among the staff - $1,200 each). But what if you received totally different levels of service - say 1 excellent, 1 good and 1 just poor. You might distribute the same $60 as $30, $20 and $10 to reward the over-achiever and to provide an incentive to the underachiever to get better. Short of what would probably be a contentious meeting among all condo owners, this probably won't happen, so the underachiever will be rewarded for crappy service and the overachiever will not work as hard next year (why should they) and you might get worse service overall.

Answer 2

Holiday tips will vary according to your means, the city in which you live and the type of relationship that you have with the person being tipped. That being said, here are some general guidelines for a few of the outstanding individuals who might be on your list:



* Newspaper person: $15-$25 for daily, $5-$15 for weekend

* Doorman: $25-$100

* Building Custodian: $20-$30

* Building Superintendent: $30-$100 depending on building

* Housekeeper: A week's pay or more

* Babysitter: Two nights pay, or a small gift

* Hair stylist: The cost of a session, plus a small gift

* Personal Trainer: $50

* Parking Attendants: A half-month's garage rate divided among attendants; or $10-$20 per person



More on Holiday Tipping - http://www.ornament-shop.net/holiday-tipping.htm

Answer 3

I'm pretty sure that you are worried about the "gift tax". I checked on the IRS Frequently Asked Questions to make sure and the limit for one person giving to another is 12,999$ and below. If it is more than that, they have to fill out a 1099 form and claim it as income. However, even for a pool of cash that you are going to split between staff you should have no problems if it's from a group to several individuals. And you are really going to make their holidays!

Answer 4

there is no tax advantage to tipping in any form

the people receiving the tips will have to declare that as income