Whenever possible and convenient, I try to tip with cash. When you tip with a credit card, there is an electronic paper record of the amount you tipped for service. When it comes time to report earnings at the end of the year, all of that tip is counted towards the earnings of that individual. When you tip with cash, there is no such paper trail and it is the individual’s own responsibility to declare how much they’ve earned in tips.
Ask any waiter or waitress about how they treat tips and, if they’re honest, you’ll get one response – they don’t report all their tips. When you’re making a piddly $2 per hour in salary and live off tips, you’ll find that cash “disappears.” (though it would be impossible to prove this) But honestly, these individuals work their butts off for a small payoff and they can would appreciate all the help they can get. So, if you’re the type that tips big because you understand how hard it is to be a server, hook them up by using cash – it’ll invisibly bump your tip percentage up a few points.