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Client's have a habit of making mistakes

The 8% tips and the wages are reported and are fair game for a 401k deferral. What is not usually reported is the excess tips over 8%. Reality is: the average waiter makes 24k a year and reports 16k. The standard deduction is $5500 and the personal exemption is $3300 yielding taxable income of 7k and a tax owed of $800, and with the earned income credit they may not even pay that. So how much under withholding can occur? Trying to get a waiter to report all of their tip income is like trying to teach a pig to sing: Its a waste of your time and it annoys the pig. So stay cool; I have a lot of 401k plans in restaurant and they work to an extent, but it ain't perfect.