How much should I tip?

Jan 22, 2025

person holding credit card swipe machine — Photo by Blake Wisz on Unsplash

Good morning,

The opportunity - or not so subtle hint - to leave a tip is everywhere these days.

I've seen this referred to as "tip-flation."

Whether you're ordering Doordash, picking up Starbucks, or using a self-checkout kiosk, you'll likely be prompted to tip.

Here's an article from Pew Research Center on the topic.

I'm happy to leave a tip for good service.

But with "suggested tip amounts" showing up at more and more places, I'm confused.

Maybe you are too.

Here's an article outlining the "new etiquette for tipping."

Despite my confusion, here's one thing I can tell you with 100% confidence:

You should never, ever tip the IRS

Just call me Captain Obvious!

But it's not simply a matter of paying the legal minimum tax due when you file your income taxes each year, which - of course - you should be doing.

You should also look at tax planning opportunities this year that could have an impact on your total lifetime tax bill.

See here and here for examples of tax planning opportunities.

And while tax planning is typically a 4th quarter, end-of-year planning topic, I wanted to bring this to your attention in January.

Because you'll be working on filing your 2024 income taxes soon, and tax planning is a year-round effort.

Or at least I believe it should be.

Speaking of filing your taxes, if you're a client or have your investment accounts at Schwab, they've notified me that they'll generate your 2024 tax documents between January 31st and February 28th.

You can also login to Schwab.com and access your Schwab 1099 Dashboard.

Once you're logged in, you'll find the 1099 Dashboard on your Statements & Tax Forms page.

One related note: as we enter tax filing season, we'll also be reading and hearing about the uptick in scams related to your taxes and the IRS.

Here's another thing I can tell you with 100% confidence:

The IRS will NEVER call you.

So if you ever receive a call from someone claiming to be the IRS, you should hang up and block the number. And be sure to tell your friends and family.

Especially older family members who are typically the target of such scams.

In fact, read this from the IRS.