Amex FR for tipped employees

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NWC28
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Amex FR for tipped employees

Postby NWC28 » Fri Nov 29, 2013 9:50 pm

Hi there! Brand new to the forums but I'm pretty sure I've read just about every thread on here.

I'm a bartender and restaurant manager who has good credit and I'm planning on getting an BCP in the near future. As with all tipped employees not all of the money that I make is declared on my taxes.

I'm thinking that if I get an Amex and eventually get FR'd I could possibly get into trouble with them because a lot of the money I make is not declared therefore it is not on a paystub or a W-2.

My own income is about $60k (household $100k+) but a large amount of it is from tips.

I know that the logical thing would be to only write the money I make on paper on the app but that would be around 30k.

Is there anyone on the board who would have advise or a definitive answer to what I should do? Would it be worth it to apply with only 30K income? Is there some way I could prove I make more than that?

Thank you!

(Also I'm aware that this is a touchy subject about the declaration of tips. I can assure you that the way I declare is completely legal where I live. There is a minimum for the declarations of tips which I meet every pay period.)


CC Deville
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Postby CC Deville » Sat Nov 30, 2013 3:00 pm

Whatever you claimed as income on your Federal taxes for 2012 is what you should use in your application. If Amex chooses to launch a financial review next year they will request your 2013 Federal taxes which should be close to what you had in 2012 and you will have nothing to worry about.

Overall people make way too big a deal about financial reviews. Nobody really knows what triggers one so you might as well enjoy the card until (if) it happens.

It is highly likely that you will end up getting the standard $2,000 initial credit line anyway so inflating income is not necessary. You can always do the 61 day CLI later on.

MemberSince99
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Postby MemberSince99 » Sat Nov 30, 2013 5:03 pm

Hummm I wouldn't exactly bet any money on the IRS being down with the way the tips are declared.


But I'm not here to judge you and I don't care. They take pretty much half of what I make and it's STILL never enough and my taxes continue to go up while I listen to pretty well to do people on Fox News moan how evil a 15% tax on their capital gains and a 13% rate on their millions in income is. Dudes, all I can say is if you want a pity party from me, don't hold your breath - I'll GLADLY trade you rates any time you like. Try paying 33% some time, THEN moan to me how life is a biatch. None of you is crying for me, so I don't pity you a damn bit, sorry if that makes me not quite the "compassionate conservatives" that you are.


What that means is I have no sympathy for them picking our pockets for yet more money. Just don't get caught. They will charge you big time interest and you could go to jail if they want to make an example of you. And it's not club Fed it's the kind where you probably won't sit the same way when you get out.


Anyway, what CC said - declare what is on your taxes. If they do check and find you lied, nothing good will come of that. But if the IRS checks and finds you lied, that will make Amex F/R look like a boy scout campout. I'd be careful with that because with the way the government has more and more information on us these days, who knows if they find out you are paying your entire stated income on your rent and car payment, for example. That could make them suspicious as to how you put gas in that car and eat. Just stuff like that.

samhradh
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Postby samhradh » Sat Nov 30, 2013 8:15 pm

NWC28 wrote: I know that the logical thing would be to only write the money I make on paper on the app but that would be around 30k.

Is there anyone on the board who would have advise or a definitive answer to what I should do? Would it be worth it to apply with only 30K income?


Generally the best course of action is always the most logical one. I would put the income the government thinks I earn.

Inflating your income is unlikely to result in you earning a substantially higher CL. It also doesn't sound like you need a high CL right away. Applying for the BCP with a $30K income is totally fine; it's not like you're applying for the Platinum.
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flan
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Postby flan » Sun Dec 01, 2013 11:46 am

NWC28 wrote:(Also I'm aware that this is a touchy subject about the declaration of tips. I can assure you that the way I declare is completely legal where I live. There is a minimum for the declarations of tips which I meet every pay period.)


No, it's not. Federal law requires the declaration of all income from tips, if the income exceeds $20 a month. That's black letter law, there's nothing 'touchy' about it. Failing to report all the income opens you up to all sorts of liability for not paying taxes. Your employer may tell you otherwise, but that's because having you under report your tips saves them having to pay payroll taxes on the unreported amount.

Having said that, AMEX will not take income that you're making under the table into account. They're very touchy about being involved in tax fraud and money laundering. If you say you make X, and they FR you and see the number is X/2, they'll shut you down. If you say you make X/2, and they FR you, and decide your spending isn't consistent with that income, they'll shut you down. The odds of Amex noticing are about the same as the IRS noticing, so do what you will.

NWC28
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Postby NWC28 » Thu Dec 05, 2013 9:10 pm

Thanks guys!

Flan- I did some research after your comment and you're totally right about the tips. My bosses got some explaining to do :/

When I apply which will probably be in a couple of months (I'm waiting for a few inquiries to fall off) I'll definitely use what I can prove to be my income.

Also thinking about deleting this thread...they could already be on to me lol.

takeshi
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Postby takeshi » Fri Dec 06, 2013 12:40 pm

NWC28 wrote:Is there anyone on the board who would have advise or a definitive answer to what I should do?

For any app consider the evidence you would have to provide for income.

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Snowman
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Postby Snowman » Sat Dec 07, 2013 1:21 am

I used to work in food, and I would report my tips and declare them so there is no misunderstanding. That and only what I can prove...beyond that it's none of their business IMO what my finances look like. If they ever FR me...I'll probably let them close my cards since I'd rather not deal with that entire process. Amex is good, but their not worth having my taxes being shown for any reason (not like I'm buying a home or anything...) just .02.
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DoingHomework
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Postby DoingHomework » Mon Dec 09, 2013 10:33 am

Yep, you should only use the income you can demonstrate on tax returns.

Not declaring all of your tip income is a federal crime. Amex does not want to get stuck with your debts when the IRS catches up to you and seizes your assets and throws you in jail. Not only do they not care about your unreported tip income, if you suggest that you have any unreported income they will likely deny you credit or close your account. I realize that what you are doing is common, but it is definitely not legal.

DoingHomework
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Postby DoingHomework » Mon Dec 09, 2013 10:45 am

NWC28 wrote:I did some research after your comment and you're totally right about the tips. My bosses got some explaining to do :/


Actually it's YOUR responsibility to declare all income even if your employer does not.

While it is true that an individual employee under reporting tips is unlikely to get caught, it is not impossible, especially when the employer is doing it systematically. Where I live there was a regional restaurant chain that got busted for hiring illegal immigrants on a broad scale. The investigation into what the owners were doing was very broad and extended to tax evasion on all employees. I personally know of a few wait staff that got audited and had to pay penalties for what the employer did. And the employers are now in prison serving very long sentences (more than 20 years!) partly for tax evasion and partly on the immigration charges. I can't for the life of me see how anyone could think having a little more pocket money every month is worth it!

So, NWC, it is very unlikely you'll get caught. But why would you want to risk it? Pay your taxes on all your income. You'll sleep better at night and never have to look over your shoulder.



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